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Fort Worth, Texas-based Burlington Northern Santa Fe Corp. (BNI) offers rail transportation services to two-thirds of the Western U.S. as well as from the Gulf of Mexico to Canada.
We are continuing our Hold on Burlington Northern Santa Fe Corporation, but decreasing our target price to $87. BNI reported 2008 third quarter diluted EPS before nonrecurring items of $1.91, up 29% year-over-year and well above consensus of $1.69 and our $1.64 estimate, as revenues came in higher than expected.
As a result, we are raising our 2008 EPS estimate to $6.30 from $5.95 from $6.05, in line with the company's earnings guidance. Our 2009 EPS estimate remains $6.90. Going forward, revenues should benefit from fuel surcharges and rate increases, partially offset by significantly higher unhedged fuel costs and lower volumes. BNI recently increased its quarterly dividend by 25% to a $1.60 annual rate, providing a 1.9% yield.
Read the full analyst report on BNI
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