(The Associated Press circulated the following on February 5.)
NEW YORK — Shares of major North American railroads mostly fell along with the broader market Tuesday, after a UBS analyst downgraded two eastern U.S. rails.
Analyst Rick Paterson reduced his rating on Jacksonville, Fla.-based CSX Corp. and Norfolk, Va.-based Norfolk Southern Corp. “Neutral” from “Buy.”
Paterson said that while CSX showed operational strength and improving pricing in its recent fourth-quarter report, it is currently the most expensive stock among major Class I railroads.
Operational strength is also a positive at Norfolk Southern, Paterson said, but he remains concerned that the company won’t be able to increase earnings significantly in the near term.
The analyst said both stocks’ values should become more attractive for investors over the next six months, as he expects a great deal of volatility in the rail sector during the period.
Also Tuesday, Kansas City Southern said its fourth-quarter earnings surged 40 percent, beating Wall Street’s expectations on strong pricing and carload volume growth led by chemicals and petroleum shipments.
Longbow Research analyst Lee Klaskow maintained his “Neutral” rating on the stock, and kept his 2008 and 2009 earnings predictions unchanged.
In afternoon trading, Kansas City Southern rose $1.44, or 3.9 percent, to $38.26.
CSX Corp. slipped $1.33, or 2.7 percent, to $47.71, while Norfolk Southern Corp. lost $1.06 to $53.59.
Union Pacific Corp. fell $1.79 to $123.91, and Burlington Northern Santa Fe Corp. retreated 82 cents to $86.45.
Canadian National Railway Co.slipped $1.30, or 2.5 percent, to $50.26, while Canadian Pacific Railway Ltd. lost $1.10 to $68.96.