Morgan Stanley Reiterates Overweight Rating, $73 PT on Genesee & Wyoming
In a report published Wednesday, Morgan Stanley reiterated its Overweight rating and $73.00 price target on Genesee & Wyoming (NYSE: GWR).
Morgan Stanley noted, “When we upgraded GWR, we highlighted significant value creation from the RA transaction as a key pillar of the thesis. We estimated that the RA transaction would be accretive by at least 10% in 2013. Monday, GWR filed an 8-K outlining the transaction financing terms, which were far superior to what we modeled. Moreover, the STB deemed the transaction ‘minor' and provided a preliminary determination that there are no anti-competitive effects, which means completion of the regulatory review before YE is possible. Both of these updates are incremental positives for the shares and EPS outlook. In addition, GWR continues to make progress in other non-deal areas, such as iron ore export contracts with OneSteel starting in 4Q12 and Tata Steel Minerals Canada in early 2013 and new high-powered locomotives driving cost and service improvements in Australia. All of these developments give us further conviction in our OW rating on shares of GWR.”
Genesee & Wyoming closed on Tuesday at $66.42
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