Greenbrier upgraded to Buy at Stifel as rail fundamentals seen improving

|By:, SA News Editor

Greenbrier (GBX +6%) jumps as much as 7% after Stifel upgrades shares to Buy from Hold with a $51 price target, raised from $48, saying GBX is now a "significantly stronger" company and the market may be underestimating the cumulative benefit of several recent deals to grow and diversify the business.

GBX has been weak since reporting FQ3 results last month, as guidance implied a significant step-down in earnings for Q4, but Stifel sees conditions in North America starting to improve modestly and believes GBX's execution in a difficult market has been impressive.

Despite anticipated margin headwinds next year, the firm thinks GBX's deal with MUL and international expansion will support EPS growth in 2018, which should drive shares higher.

Stifel also upgrades GATX (GATX +3.8%) to Hold from Sell, saying railcar leasing fundamentals should show stability in Q2, while cutting Wabtec (WAB +0.2%) to Hold from Buy as valuation appears full following recent strength in the shares.