NEW YORK (AP) -- Shares of freight transportation services provider Arkansas Best rose to their highest level in more than a year on Friday, after some of its union-covered employees ratified a five-year labor deal.
THE SPARK: After the market closed Thursday, Arkansas Best Corp. announced that its ABF Freight Systems Inc. workers, who are represented by the International Brotherhood of Teamsters, ratified a collective bargaining agreement that covers the next five years.
The Fort Smith, Ark., company said that more than 6,100 ballots were cast and counted.
THE ANALYSIS: Christian Wetherbee of Citi Investment Research reaffirmed a "Buy" rating and boosted the price target of Arkansas Best to $24 from $20.
In a client note, that analyst said the contract ratification should help unlock earnings potential next year and in the future.
Wetherbee, who got to review the contract terms, said that it seems like a 7 percent wage cut and loss of one week's paid vacation that the union workers agreed to could equate to about $30 million in annual expense savings, or 70 cents per share. The savings may be more than that when accounting for other issues, he added.
A representative for Arkansas Best declined to comment.
SHARE ACTION: Arkansas Best's stock gained $3.26, or 16.3 percent, to $23.25 in morning trading, after touching $23.45 earlier in the session, its highest point in nearly two years. The stock has more than doubled in the first half of 2013.