Burlington Northern Balances Out

We are continuing our Hold on Burlington Northern Santa Fe Corporation (BNI), but decreasing our target price to $66. BNI reported 2008 fourth quarter diluted EPS of $1.79, up 23% year over year and above consensus of $1.74 and our $1.75 estimate, as expenses, primarily for fuel, were lower than estimated.

Revenues were also below expectations, reflecting a 5% decline in volume that accelerated in the second half of the fourth quarter due to the global economic slowdown. We are sharply reducing our 2009 diluted EPS estimate to $5.05 from $6.90.

Going forward, we expect that significantly lower volumes and unhedged fuel costs will offset benefits from rate increases and fuel surcharges. BNI recently increased its dividend by 25% to a $1.60 annual rate.

Read the full analyst report on BNI.

Read the full analyst report on BNI