Credit Suisse upgrades Aurizon Holdings Ltd to outperform

Aurizon Holdings Ltd (ASX: AZJ) "likely surprise to the upside" for FY18

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Shares in Australian rail freight operator Aurizon Holdings Ltd (ASX: AZJ) opened up to start the week at $4.37 at the time of writing after tracking down noticeably in the last 12-months from a share price of $5.31 at this time last year.

Credit Suisse has upgraded FY18 estimates for Aurizon by 3% due to cost reductions in the network, with a Credit Suisse broker saying Aurizon would "likely surprise to the upside" for FY18.

Credit Suisse has upgraded its rating on Aurizon to outperform from neutral with the share price target raised to $4.85 from $4.75.

Aurizon has been in the news of late due to QCA proposed restrictions on maximum revenue between July 2017 and July 2021 which could see haulage capacity decrease by 10% despite strong conditions in the global coal industry.

Aurizon reported a half-year profit rise of 52% in February 21, with statutory profit at $281 million and Aurizon management maintaining FY18 guidance for underlying EBIT in the range of $900 million to $960 million.

Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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