10 October 2006
Speeding Railways May Outrun Slowing Economies
Efforts by central banks in Canada and the United States to slow
the North American economy are finally paying off with economists slashing their estimates for 2006 and 2007 growth, but UBS Securities
Canada insists that railways - a few of them, anyway - will continue to generate strong growth even as economies cool.
Thanks to stringent cost controls, higher locomotive velocities and less "dwell time" in the train yards, analyst Fadi Chamoun
says Canadian Pacific Railway Ltd.'s improved productivity will outweigh any fall in coal shipments.
Mr. Chamoun raised his third-quarter profit forecast for CPR to $1 a share from 95 cents, which reflects a gain of 18
percent from the same quarter a year earlier. Mr. Chamoun has a price target of $73 on the stock, which slumped $1.51 to $56.80 on
Friday.
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