Kansas City Southern's Growth Potential Still Exists, Credit Suisse Says
In a report published Wednesday, Credit Suisse analysts maintained an Outperform rating on Kansas City Southern (NYSE: KSU), while reducing the price target from $121 to $118.
Kansas City Southern reported its adj. EPS at $1.03, short of Credit Suisse estimate of $1.06 and consensus of $1.07. Although revenue was in-line with expectations, O.R. was about 50 bps shy of the Credit Suisse forecast, mainly on account of higher materials expense.
"Notwithstanding the growth headwinds posed by energy businesses both new (frac sand and shale-related metals) and old (utility coal), KSU still stands to benefit from above-market growth in cross-border trade between the U.S. and Mexico over the long-term in businesses including the Port of Lazaro, automotive, x-border intermodal, and petrochemicals.," the analysts wrote.
In the report Credit Suisse noted, "Looking at the remainder of 2015, the slate has largely been cleared not only with respect to a reset of energy expectations but on the cost side as well, as the company works through a national equipment crunch, a temporary scale-back of resources in the US, and understaffing in Mexico."
The EPS estimates for FY15, FY16 and FY17 have been reduced from $5.20 to $5.12, from $6.18 to $6.03 and from $7.13 to $6.94, respectively.
Latest Ratings for KSU
|Oct 2016||Seaport Global||Initiates Coverage On||Accumulate|
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