Ahead of the Bell: Greenbrier

KeyBanc analyst upgrades Greenbrier to "Buy" citing improved product lineup and visibility

Associated Press

NEW YORK (AP) -- A KeyBanc analyst on Wednesday boosted his rating for Greenbrier Cos. to "Buy" from "Hold," pointing to the railcar company's improving product mix and increased insights into its long-term profitability prospects.

Steve Barger, who also set a $27 price target for the company, said he thinks Greenbrier is well set for a recovery in non-tank railcar orders. In addition, the company's plans to boost profitability and free up $100 million in capital by the end of fiscal 2014 by selling off assets can be achieved or even exceeded, he said.

Last week, Greenbrier reported a better-than-expected second-quarter profit, despite lower-than-expected revenue. The company also said that it expects its fiscal 2013 results to be roughly flat with fiscal 2012 levels.

Barger added that he thinks the Lake Oswego, Ore.-based company's management is "highly motivated" to boost returns and raise the company's share price.

"We acknowledge that Greenbrier's execution has been inconsistent in the past, but we think the combination of a more focused management team, the potential for improving non-tank orders and Greenbrier's relative and absolute valuation make the shares compelling, although speculative in nature," Barger wrote in a note to investors.

The analyst said that if results start to improve in line with the company's goals, other analysts will probably start to increase estimates and price targets and possibly upgrade the company.

Greenbrier shares finished at $21.91 on Tuesday. Its shares hit a 52-week high of $23.08 last Wednesday. They are up 67 percent from their low of the year of $13.10 last May.

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