BMO Capital Markets Maintains Perform, $66 Target on Kansas City Southern

BMO Capital Markets reiterates its Outperform rating and $66 target price on Kansas City Southern (NYSE: KSU) as the company posts Q411 results below forecasts, despite lower tax rate. BMO Capital does believe valuation is at full value and vulnerable to moderating earnings growth.

BMO Capital Markets says, "SU results fell 6.5% short of our estimate largely owing to lower-than-expected revenues per carload. Excluding $0.14/share in debt retirement costs and a $0.23/share tax benefit largely related to foreign exchange rate fluctuation, EPS would have been $0.78 which is slightly below BMO Research and consensus' estimate of $0.79. ...The company enjoys ample capacity to continue absorbing volume growth at low incremental costs, particularly in the intermodal segment. This should further improve the company's operating ratio from 2011 adjusted level of 72.1%."

KSU closed at $72.32 a share yesterday.