Deutsche Bank Starts Various Transportation Stocks: KNX, DSX, FDX, HTLD, NSC, ODFL, CSX at Buy

September 30, 2009 6:24 PM EDT

Deutsche Bank initiated coverage on a plethora of stocks in the Transportation sector this afternoon:

• Knight Transportation (NYSE: KNX) - Buy with a $20 target. Positioned to benefit from an improving freight environment given a large regional dry van service network, greater relative exposure to the spot market and being open to acquisitions as the economy strengthens.
  
• Capital Product Partners (Nasdaq: CPLP) - Buy with a $12 target. Believes CPLP could be a potential long-term holding given solid long-term charter coverage and stable cash flow story.
  
• Diana Shipping (NYSE: DSX) - Buy with a $20 target. Believes balance sheet stability and focus on medium-to-long term time charters allows for market upside.
  
• Navios Partners (NYSE: NMM) - Buy with a $15 target. Sees a relative valuation discount, secure cash flow streams and solid dividends driving a compelling valuation proposition.
  
• FedEx (NYSE: FDX) - Buy with a $98 target. Likes FDX's exposure to emerging markets and operating leverage.
  
• Heartland Express (Nasdaq: HTLD) - Buy with an $18 target. Poised to benefit from an eventural turn in the freight environment.
  
• Norfolk Southern (NYSE: NSC) - Buy with a $55 target. NSC is poised to benefit from a favorable long-term outlook for the railroad sector in part to a solid pricing environment, operating leverage to carload growth and high barriers to entry in the consolidated marketplace.
  
• Old Dominion Freight Line (Nasdaq: ODFL) - Buy with a $35 target. Positioned to benefit from an eventural uptick in freight demand and/or further industry consolidation.
  
• JB Hunt (Nasdaq: JBHT) - Buy with a $38 target. "One of our preferred stocks" on an improving freight environment as secular growth in the intermodal markets coupled with an increasingly asset-light service offering and recent contract wins.
  
• Union Pacific (NYSE: UNP) - Buy with a $68 target. Has demonstrated the ability to increase profitabilyt and expand margins in a down volume environment given strong pricing and impressive cost control/productivity measures.
  
• CSX Corp. (NYSE: CSX) - Buy with a $50 target. Likes that CSX was able to offset steep volume declines with firm pricing and a strong cost cutting/productivity improvements.
  
• Genesee & Wyoming (NYSE: GWR) - Buy with a $36 target. Sees strong long-term growth prospects as the company continues to build out its local and regional network both organically and via acquisitions.
  
• UPS (NYSE: UPS) - Hold with a $60 target. Sees a balnaced risk-reward profile despite an expected benefit from positive operating leverage as global package volumes build.
  
• YRC Worldwide (Nasdaq: YRCW) - Hold with a $4.50 target. Poised to rebound significantly from current levels if the company can navigate through a very challenging LTL marketplace.
  
• CH Robinson (Nasdaq: CHRW) - Hold with a $62 target. Sees a balanced risk-reward equation at current levels.
  
• Werner Enterprises (Nasdaq: WERN) - Hold with a $21 target. Despite the belief that Werner has greater operating leverage to a turn in frieght demand than the Street is pricing in, Deutsche Bank sees a balanced risk-reward profile.
  
• Con-way (NYSE: CNW) - Hold with a $40 target. Following the recent run-up, the firm believes the stock is near fair value.
  
• Burlington Northern (NYSE: BNI) - Hold with an $85 target. While Deutsche believes in BNI's long-term story, it's lackluster carload volumes, high coal stockpiles and a more competitive intermodal pricing environment leave it on the sidelines.
  
• Arkansas Best (Nasdaq: ABFS) - Hold with a $28 target. Likes that ABFS has strong operating leverage to a turn in tonnage levels and/or further industry consolidation, but sees it near fair value at current levels.
  
• Textainer Group (NYSE: TGH) - Hold with a $16 target. Sees valuation, poor industry fundamentals, and potential industry wide counterparty risk weighing on risk-reward.
  
• Landstar (Nasdaq: LSTR) - Hold with a $40 target. Sees a balanced risk-reward ratio near current levels.
  
• Overseas Shipholding (NYSE: OSG) - Hold with a $38 target. Day rate weakness will likely constrain profitability over the near-term.
  
• General Maritime (NYSE: GMR) - Hold with a $7 target. The firm likes GMR as a solid potential play on tanker fundamentals, but is concerned with the challenging near-to-medium term tanker environment.
  
• Seaspan (NYSE: SSW) - Hold with a $9 target. Sees poor industry fundamentals continuing to drive headline and potential counterparty risk.
  
• Teekay Tankers (NYSE: TNK) - Hold with an $8 target. Believes the current gap between industry wide fundamentals and sentiment presents too much uncertainty for spot oriented names like TNK.
  
• Genco Shipping (NYSE: GNK) - Hold with a $23 target. Near-term spot exposure skews its relative risk/reward profile in the current environment. Will stay on the sidelines for now.
  
• Teekay (NYSE: TK) - Hold with a $18 target. Day rate weakness likely constrains profitability over the medium-term, creating a modest disconnected with TK's current valuation.
  
• Euroseas (Nasdaq: ESEA) - Hold with a $5 target. Sees several of Eurosea's vessels facing poor employment prospects, limiting upside.
  
• Excel Maritime (NYSE: EXM) - Hold with a $6 target. Sees limited upside given relative valuation premium, financial leverage and near-term spot exposure.
  
• Frontline (NYSE: FRO) - Sell with a $15 price target. Concerned with weak oil demand, poor tanker fundamentals and Frontline's lofty valuation.
  
• Eagle Bulk Shipping (Nasdaq: EGLE) - Sell with a $3 target. Compared to others in the group, its financial leverage, suspended dividend and premium valuation make it less attractive.

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