UPDATE: Bank of America Lowers Kansas City Southern's PO
According to a research report published this morning, Bank of America has lowered Kansas City Southern's (NYSE: KSU) PO from $81 to $74.
In the report, Bank of America said, "We are lowering our 2012 and 2013 EPS estimates 6% and 5%, to $3.28 and $4.10, from $3.50 and $4.30, respectively, due to lower 2Q coal and chemical volume trends. We are also lowering our price objective to $74 from $81, based on a 22.5x forward P/E on our 2012E EPS (from 23x), which equates to 18x our 2013 estimate, within its 13-28x forward PE range. With 5 weeks left in 2Q, we believe volumes are unlikely to recover given its utility customer has extended its target to resume coal deliveries to the end of May, its 5th delay (represents 2 of KSU's 9 served plants). This non-regulated carrier continues to choose Nat Gas over Powder River Basin coal with Nat Gas below $3."
Bank of America maintains its Buy rating and on Kansas City Southern, which closed Friday at $66.44.
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