Shares of Kansas City Southern KSU,
rose 1.3% in premarket trading on Monday, contributing to Friday’s 9.7% increase, after JP Morgan analyst Brian Ossenbeck distanced himself from his bearish attitude towards the rail operator, saying that a Report of a potential takeover bid has likely created a “bottom” for the stock. Ossenbeck raised his rating to neutral, having been underweight since April 9, while raising his price target from $ 142 to $ 169. The stock shot on Friday after The Wall Street Journal reported which Blackstone Group Inc.’s BX,
Infrastructure Arm and Global Infrastructure Partners were together investigating a deal that could be worth over $ 21 billion to buy Kansas City Southern (KSU). The company’s market capitalization at Friday’s closing price was $ 16.33 billion. “The potential offer that a short-term KSU offer that exceeds our concerns about exposure to Mexico is a major driver of our upgrade to neutral,” Ossenbeck wrote in a letter to customers. In addition, the relative risk of COVID-19 in Mexico versus the US has decreased compared to early April when we downgraded to underweight, while operational efficiency has also been shown to be sufficient to address the revenues from Mexico’s energy reform reform that are below our expectations to compensate. ” The stock is up 12.2% through Friday, while the Dow Jones Transportation Average DJT,
lost 8.3% and the Dow Jones Industrial Average DJIA,
decreased by 7.4%.