Citigroup down on Burlington Northern and Others

Mixed review from Citigroup (NYSE:C) today casting doubt on the railroad sector stocks, including Burlington Northern Santa Fe Corporation (NYSE:BNI) and CSX Corporation (Public, NYSE:CSX) both trading down on the news.

Citigroup (C)trimmed earnings estimates for the year on most major railroads today due to disappointing third-quarter volumes and weak expectations for the balance of 2009.  Citi raised stock price targets on the six railroads to match earnings estimates for 2010, a "recovery year," but recommended investors to "take a breather" on the shares in a research note.

Symbol	Price	Change
BNI	83.95	+0.38
CSX	44.74	-1.11

Citi upgraded Burlington Northern Santa Fe Corp. (BNI) to "Hold" from "Sell," citing "impressive" cost cuts. In July, the company said it had slashed costs by 33 percent in its second quarter. It had 37,715 employees at the end of June compared with 41,404 a year ago.  Citgroup did cut earnings estimates for the rest of the year, saying shipping volumes have been weak in the current quarter. They also said he sees no boost from back-to-school activity, and expectations for the holiday season are minimal.  Expecting per-share profit of $5.14 from $5.31 and set an $89 price target. Wall Street analysts see profit of $4.96 per share for 2009.

The factors affecting Burlington Northern's rail volumes are hitting the railroad sector broadly, timing of a recovery in railroad volumes -- a key gauge of broader economic health -- is still uncertain.

Citi cut earnings estimates for 2009 by an average of 5 to 6 percent for Canadian National Railway Co., CSX Corp. (CSX), Norfolk Southern Corp. and Union Pacific Corp. They also raised target prices for 2010 across the board. He sees rail volumes recovering next year, growing 3 to 4 percent after dropping between 5 and 9 percent this year. That signals revenue growth of between 7 and 9 percent.

SOURCE: http://finance.yahoo.com/news/Sector-Snap-Citi-cuts-apf-1193959581.html?x=0&.v=1