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UPDATE: Morgan Stanley Reiterates on Kansas City Southern Following 1Q14 Beat

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In a report published Thursday, Morgan Stanley analyst William J. Greene reiterated an Overweight rating on Kansas City Southern (NYSE: KSU), but removed the $102.00 price target.

In the report, Morgan Stanley noted, “Consistent with our views heading into the print (See 1Q14 Earnings Preview – Look Past the Weather, 4/7/14), KSU delivered 1Q EPS ahead of consensus expectations as strong long-haul cross-border grain volumes had a positive top-line mix impact and weather was a relatively small headwind to operations. We're impressed with KSU's 18% YoY EPS growth in 1Q, which exceeded mgmt's guidance for mid-teens FY14 EPS growth; however, we think investors will need to see continued proof of sustainable earnings beats before rewarding shares with a higher multiple.

"To some extent, KSU remains a ‘show me' stock following the reset in earnings growth expectations mgmt provided last quarter. Given growing EM concerns and KSU's dependence on Mexican industrialization, some investors doubt growth expectations will be exceeded or even revised upward, but mgmt acknowledged on the call that KSU could ultimately return to 20%+ EPS growth, depending on the timing of specific growth opportunities.”

Kansas City Southern closed on Wednesday at $101.44.

Latest Ratings for KSU

DateFirmActionFromTo
Aug 2014MacquarieUpgradesUnderperformNeutral
Aug 2014MacquarieMaintainsNeutral
Jul 2014BMO CapitalMaintainsMarket Perform

View More Analyst Ratings for KSU
View the Latest Analyst Ratings

Posted-In: Morgan Stanley William J. GreeneAnalyst Color Price Target Analyst Ratings

 

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