RailAmerica’s Margin To Expand On Extension Of Train Length

Analysts at Deutsche Bank maintain their "buy" rating on RailAmerica Inc

. The target price for RA is set to $16. According to Deutsche Bank, “Yesterday, RA reported better-than-expected June carload volumes as carloads (excluding the discontinued Ottawa Valley Railway operation) were up 11.8% y/y. RA saw carloads increase 10.5% y/y in Q2, which compares to our estimate of 8.5%.” “We believe RA's operating leverage will be magnified by recent carload growth. The company has initiated several cost cutting programs and stands to benefit from sizable incremental margins as train lengths are extended,” the analysts mention.