UPDATE: Credit Suisse Downgrades Kansas City Southern (KSU) to Neutral; Analyst Doesn't See Near-Term Inflection

(Updated - May 15, 2015 11:45 AM EDT)

Credit Suisse downgraded Kansas City Southern (NYSE: KSU) from Outperform to Neutral with a price target of $101 (from $118). Analyst Allison M. Landry is concerned service issues are impacting its core growth and doesn't see an inflection near-term.

"We fully acknowledge that the stock has already sold off more than 20% YTD, and probably would not argue that at $95/sh, it is a compelling entry point for investors with a 2-3yr (or longer) time horizon. Indeed, we continue to believe in the long-term secular growth story at KSU (given line of sight to a number of opportunities over the next several years). However, we don’t see a compelling reason to own the stock for the next 3-6 months," said Landry.

"Despite our longer term conviction remaining relatively unscathed, we are concerned in the short term regarding KSU's admission (to mgmt's credit) that idiosyncratic service issues are impacting its core growth areas - namely cross border intermodal and autos - both of which are tracking in line with or below the industry avg (see Ex 3 and 4). This is a paramount concern for us, as secular cross border U.S./Mexico growth has been the central tenet of our positive thesis on the stock - before the energy boom, and after," added the analyst.

For an analyst ratings summary and ratings history on Kansas City Southern click here. For more ratings news on Kansas City Southern click here.

Shares of Kansas City Southern closed at $94.89 yesterday.

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