Sector Snap: Citi Cuts Railroads Estimates

NEW YORK (AP) — Citigroup trimmed earnings estimates for the year on most major railroads Wednesday due to disappointing third-quarter volumes and weak expectations for the balance of 2009.

While analyst Matthew Troy lifted his stock price targets on the six railroads to match earnings estimates for 2010, a "recovery year," he told investors to "take a breather" on the shares in a research note.

He also upgraded Burlington Northern Santa Fe Corp. to "Hold" from "Sell," citing "impressive" cost cuts. In July, the company said it had slashed costs by 33 percent in its second quarter. It had 37,715 employees at the end of June compared with 41,404 a year ago.

But Troy did cut earnings estimates for the rest of the year, saying shipping volumes have been weak in the current quarter. He also said he sees no boost from back-to-school activity, and expectations for the holiday season are minimal.

He expects per-share profit of $5.14 from $5.31 and set an $89 price target. Wall Street analysts see profit of $4.96 per share for 2009.