- Bank of America says Kansas City Southern (NYSE:KSU) is still one of its top picks in the transportation sector.
- "We believe KSU is among the best in terms of operating leverage potential among the Class I’s as the second derivative of volumes inflect, with runway for further train consolidations in its Manifest segment, and a more refined Auto network," notes the firm.
- The longer-term potential for supply chain near-shoring in Mexico when USMCA goes into effect July 1 is also noted.
- BofA sees Kansas City Southern still generating +$600M in free cash flow this year.
- A Buy rating is kept in place on KSU and the new price objective of $168 is above the average sell-side PT of $151.68.