(The Associated Press circulated the following on August 24, 2009.)
NEW YORK — Shares of railroad operator Kansas City Southern slipped Monday as a UBS analyst downgraded the stock to “Neutral,” saying while the stock is still a good one for investors, it no longer warrants a “Buy” rating.
Analyst Rick Paterson cited a recent stock rally as the reason for the downgrade. Shares are up about 9 percent since Aug. 5, when Paterson raised his price target on the stock to $25 from $21.
Paterson said the stock will not likely gain much more considering near-term earnings should be pressured by still-weak demand in rail shipping. He doesn’t expect earnings to return to 2008 levels until 2012.
But with certain economic indicators beginning to show positive signs, “it’s entirely possible we’re getting off this train too early,” he said.
“But even if that’s the case we believe we can steer investors towards better opportunities elsewhere in freight transportation.” He recommends eastern rails CSX Corp. and Norfolk Southern Corp.
Shares fell 64 cents, or 2.7 percent, to $23.36 in midday trading.