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GATX Corporation (GMT)

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We are upgrading our recommendation on GATX Corporation (GMT) to Outperform. The rail, marine and industrial company's first quarter adjusted earnings surpassed the Zacks Consensus Estimate and improved year over year, primarily on higher lease rates.

We expect higher lease rates to continue to remain a key growth driver for GATX in the current year and beyond. In addition, increased asset utilization through the reduction of idle rail cars and the deployment of new rail cars will be accretive to the company's long-term growth, given the growing rail freight market.

Further, GATX enjoys a healthy balance sheet and is committed to enhance its shareholders value through strong dividend payments. We are recommending an Outperform rating with a target price of $45, based on 16.8x our earnings estimate for 2012.

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