Credit Suisse First Boston upgraded RailAmerica (RRA) to outperform from neutral, explaining that the company's shares are cheap at the same time no signficant negative developments appear to be on the horizon.
Analyst Jason Seidl says that RailAmerica trades at about 9.7 times his 2006 earnings per share estimates-- the lowest among any railroads he follows. Meanwhile RailAmerica's sustained operational difficulties and historical earnings per share underperformance does not warrant the same high multiples assigned to Genesee & Wyoming (GWR). He believes investors have nonetheless discounted RailAmerica to very attractive levels. His price target on the stock is $13 per share.