KeyBanc Initiates Coverage on American Railcar Industries (ARII) with a Hold
KeyBanc initiates coverage on American Railcar Industries (NASDAQ: ARII) with a Hold.
KeyBanc analyst, Steve Barger, says, "Since the railcar industry bottomed in 2002, ARII has seen robust revenue and earnings growth due to positive fundamentals associated with ethanol via tank and covered hopper manufacturing. Although we believe long-term demand drivers are in place for ethanol, in the near term we anticipate a more challenging market for these car types due to excess capacity. We expect ethanol orders to rebound as additional refining capacity comes online in FY08, and foresee ethanol orders remaining strong through FY11. We are initiating coverage of ARII with a HOLD rating, which is based on our belief that the Company is fully valued relative to its near-term prospects and as compared to its more diversified and less cyclical peer group."
KeyBanc analyst, Steve Barger, says, "Since the railcar industry bottomed in 2002, ARII has seen robust revenue and earnings growth due to positive fundamentals associated with ethanol via tank and covered hopper manufacturing. Although we believe long-term demand drivers are in place for ethanol, in the near term we anticipate a more challenging market for these car types due to excess capacity. We expect ethanol orders to rebound as additional refining capacity comes online in FY08, and foresee ethanol orders remaining strong through FY11. We are initiating coverage of ARII with a HOLD rating, which is based on our belief that the Company is fully valued relative to its near-term prospects and as compared to its more diversified and less cyclical peer group."
