Greenbrier Double Upgraded By BofA To Buy

While Greenbrier Companies Inc GBX shares declining on fears of macro growth having peaked, any deceleration would impact freight flows more than the company’s performance, according to BofA Securities.

The Greenbrier Analyst: Ken Hoexter upgraded the rating for Greenbrier from Underperform to Buy, while raising the price target from $45 to $52.

The Greenbrier Thesis: With the demand for new railcars lagging recovery in freight, there is potential for “a multi-year upcycle in new orders,” Hoexter said in the upgrade note.

The analyst raised the earnings estimate for fiscal 2022 from $2.65 to $3.40 after Greenbrier announced its fiscal third-quarter results and fiscal fourth-quarter guidance ahead of expectations while adding that the company has “further earnings upside beyond our F2022 estimate as earnings have easily extended above $4.00 in past cycles.”

Hoexter noted “Structural cost improvements, rising demand, as well as pricing and mix strength appear to be driving momentum for GBX," adding that “GBX shares have pulled back from the upper-$40 range to the low-$40s in recent weeks, partly reflecting fears that macro growth has peaked, but we see this pull-back as an opportunity to buy.”

GBX Price Action: Shares of Greenbrier had risen by 2.08% to $44.17 at the time of publication Monday.