The US transportation outlook has shifted from recession to prospects for ramping up goods delivery after the Trump administration lowered China tariffs to 30% from 145% for 90 days, Bank of America Securities said in a Friday research note.
The 90-day reprieve for imports from China "was a major relief" to shippers as signs of freight rebound emerge, the analysts said.
In the rail sector, the firm noted that industry experts at its 32nd Annual Industrial, Transportation, & Airlines Conference said that service gains and volumes were accelerating from a Q1 trough.
While truckload and intermodal segments are looking for positive EPS on volume growth and contract renewals, companies in the logistics segment are prioritizing capacity utilization and organizational restructuring for margin expansion, according to the research note.
Among rail companies, BofA increased its price targets for Canadian Pacific Kansas City (CP), Norfolk Southern (NSC) and Union Pacific (UNP) to $90, $280 and $262, respectively, with buy ratings.
BofA also has a buy rating on FedEx (FDX) and maintained its price target at $270 per share.
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