(The Associated Press circulated the following on January 16.)
NEW YORK — A pair of analysts cut their profit estimates on a number of the nation’s largest railroads on Friday, as they cited uncertainty on when the industry’s plunging volumes will start to improve.
U.S. carloads were down 8.2 percent in the fourth quarter from the year-earlier period. In December, shipments were down 14.2 percent.
JPMorgan analyst Thomas R. Wadewitz predicts most railroads will meet or slightly fall below Wall Street’s expectations when they begin to report fourth-quarter estimates next week, suggesting that the steep drop in volume on the rails offset the benefit of falling fuel prices.
“The pattern of 15-20 percent volume declines in the weekly rail volumes has now been in place for about four weeks,” he wrote in a note to clients. “While some manufacturing capacity may come back on line in February following extended holiday shutdowns, our sense is that it may take several months to see a meaningful moderation from the current deterioration in rail volumes.”
He lowered his fourth-quarter estimates by about 10 percent across most major railroads.
Also Friday, Longbow Research analyst Lee Klaskow cut his earnings estimates and price targets across the group. He noted, however, that he still believes the railroads are a “safer haven” for investors than other transportation stocks.
In afternoon trading, shares of Union Pacific Corp. lost 71 cents to $40.52. Burlington Northern Santa Fe Corp. gained 41 cents to $63.78 and CSX Corp. gave up 45 cents to reach $29.73.