(The Associated Press circulated the following on March 30, 2009.)
NEW YORK — Shares of freight railroad companies fell Monday as the broader market stumbled and a Goldman Sachs analyst lowered earnings estimates of railroads due to a slump in shipment volumes.
Analyst David Feinberg said the industry showed signs of stabilizing but that the decline in shipping volumes will be the worst on record. He predicted 2009 volume will sink 13.3 percent instead of an earlier forecast of a 10.8 percent decline.
Feinberg downgraded Union Pacific Corp., the nation’s largest freight railroad operator, to “Neutral” from “Buy,” and replaced it on Goldman’s buy-list with Burlington Northern Santa Fe Corp. He said Burlington’s BNSF Railway was taking market share from Union Pacific and will emerge in good position when consumer spending recovers thanks to an intermodal agreement with trucking operator JB Hunt Transport Services Inc.
The Goldman analyst reduced his earnings per share forecast of both railroads for 2009-2011, with sharper reductions in his Union Pacific estimates. Feinberg also lowered earnings forecasts through 2011 for Canadian Pacific Railway Ltd., CSX Corp., Norfolk Southern Corp. and Kansas City Southern. He slightly raised his 2009 earnings-per-share forecast for Canadian National Railway Co. but lowered the 2010 and 2011 outlooks.
In midday trading, shares of Burlington Northern fell $1.23, or 2 percent, to $60.75; and Union Pacific dropped $2.14, or 5 percent, to $40.86.
Canadian National lost $2.79, or 7.5 percent, at $34.52; Canadian Pacific fell $2.86, or 8.9 percent, to $29.36; CSX dropped $1.88, or 6.7 percent, to $25.53; Norfolk Southern lost $1.81, or 5.2 percent, at $33.07; and Kansas City Southern dropped $1.18, or 8.5 percent, to $12.79.