UPDATE: Bank of America Upgrades Greenbrier Companies to Buy, Raises PT as Runway is Set for Margin Improvement

In a report published Friday, Bank of America analyst Ken Hoexter upgraded the rating on

from Underperform to Buy, and raised the price target from $20.00 to $34.00. In the report, Bank of America noted, “Greenbrier posted 4Q EPS of $0.69, above our $0.52 and the street's $0.61, with core operations contributing to $0.03/sh of the beat. While it fell shy of our top-line target, it has demonstrated solid margin improvement in its core manufacturing segment (70% of revenues), as it continues to grow and diversify its backlog. Meanwhile, it is improving efficiencies at its challenged Wheels, Repair, & Parts segment (27% of revenue), closing underperforming facilities, and unlocking capital toward its $100mn goal by February 2014 (it has already reduced capital work by $55 million, ahead of target). Production is ramping-up at its GIMSA facility, and accelerated throughout the quarter, where it is currently exceeding 15 tanks/day and intends to maintain that level while improving margins as it increases efficiency. In our view, Greenbrier is hitting its stride faster than we expected, focusing on diversifying its portfolio while maintaining a robust order book as it seeks to improve operations at its facilities, unlock capital, and improve margins. We upgrade to Buy from Underperform, as it is still trading at the bottom end of its historical EV/EBITDA range.” Greenbrier Companies closed on Thursday at $26.54.