JP Morgan Initiates Coverage On 6 Transport Companies

In a report published Monday, JP Morgan analyst Brian Ossenbeck initiated coverage of six names in the transport space.

Overweight

Ossenbeck initiated coverage of CSX Corporation CSX with an Overweight rating and $41 price target. The analyst noted that CSX is "our favored value stock" with a portfolio of coal assets that are better suited to outperform in a negative fundamental outlook as the company's coal yield has a weaker correlation with commodity metallurgical coal prices than its peers.

Canadian Pacific Railway Limited (USA) CP was also initiated at Outperform with a $290 price target as more crude carloads are still expected to ship in 2015 than 2014 despite recent oil price declines.

Finally, Kansas City Southern KSU was labeled as being a "top pick" with growth at a "reasonable" price. The analyst placed a $148 price target as the stock presents a "compelling" combination of improving network efficiencies, limited exposure to shale plays and coal challenges along with growth prospects on both sides of the U.S. and Mexico border.

Neutral

Ossenbeck initiated coverage of Canadian National Railway (USA) CNI with a Neutral rating and $88 price target given a view that the company's best in class operating margins, network reach, service metrics and ability to interchange and move traffic makes the company a "premium operator with a premium price tag."

Shares of Union Pacific Corporation UNP were also initiated with a Neutral rating and $128 price target as "competition, end markets, and port recovery temper view on growth."

Underweight

Ossenbeck initiated Norfolk Southern NSC as the lone Underweight name with a $107 price target as coal pressures points are "causing a relative headache." The analyst noted that JP Morgan Global Coal analysts are forecasting a 38 percent decline in U.S. met coal exports before bottoming near the long-term average in 2017.