Jefferies Reiterates Buy Rating On FreightCar America (RAIL)
Jefferies has released a report reiterating its Buy rating on shares of FreightCar America (NASDAQ: RAIL). The company announced today an agreement to acquire DTE Rail Services, a provider of repair and maintenance, inspection and fleet management services predominantly for coals cars.
The Jefferies analysts wrote that this acquisition should enhance RAIL's parts and repair services business. They also opined that they believe the railcar manufacturing business is in a trough and that RAIL is well positioned for an upturn.
According to Jefferies, "Industry metrics are improving and even post the closing of this transaction RAIL's balance sheet remains solid. We are encouraged by the deployment of cash to grow the business, which we believe indicates a lack of complacency on the part of management in waiting for improvement in market conditions. Our positive view on the RAIL shares reflects what we believe is the trough of the cycle for coal cars."
Jefferies has a $35 price target on the stock which is based on an EV/EBITDA multiple of about 10x the firm's 2012 estimates. During today's trading session, RAIL has gained 0.48% to $23.09.
