According to Ossenbeck’s research note, the virus has been rapidly spreading in Mexico, which is a risk factor that has been largely overlooked for positive inflections in countries better prepared and equipped to fight the pandemic.
The country’s presumed 2021 recovery appears at risk given the central government is increasingly at odds with the private sector after canceling plans for a private brewery in March through public consultation, the analyst said.
Further, Ossenbeck noted that Kansas City Southern has outperformed despite these rising risks to a material portion of its revenues. He expects the stock will lag peers as the economic impact accelerates in Mexico.
RAIL VOLUMES FALLING: North American rail volume for the week ending last Saturday slipped 16.1% to 596,710 carloads and intermodal units, versus with the same period in 2019, the Association of American Railroads reported on Wednesday. On a year-to-date basis, rail volumes were down 6.7% to nearly 9.1 million carloads and intermodal units.
Canadian and Mexican railroads totaled 301,234 carloads, down 16.7 percent compared with the same week last year, and 295,476 intermodal units, down 15.5% compared with last year.
PRICE ACTION: Shares of Kansas City Southern are down about 2% to $137.07 in afternoon trading. OTHERS TO WATCH: Other publicly traded companies in the space include CSX (CSX), Canadian National (CNI), Canadian Pacific (CP), Genesee & Wyoming (GWR), Norfolk Southern (NSC) and Union Pacific (UNP).