20 November 2006
Merrill Lowers CP Profit Forecast
Merrill Lynch & Co. Inc. has cut its 2007 profit forecast
for Canadian Pacific Ltd. but retains its "neutral" on CP stock.
UBS Securities Canada Inc. has reiterated its "buy 2" rating, saying the railway is likely to benefit from lower costs and
continuing strong demand.
Merrill reduced its forecast for CP share profit to $4.45 in 2007 from $4.55. At the annual investor workshop late last week, CP's
management forecast that share profit will range between $4.30 and $4.45.
"This continues a trend of four consecutive investor meetings at which the company set targets below the Street
[estimates]," said Ken Hoexter, an analyst with Merrill Lynch.
"The outlook provided by CP Rail is largely consistent with UBS's [estimate], albeit somewhat lower, perhaps reflecting prudent
management," said UBS analyst Fadi Chamoun.
UBS estimates 2007 profit for CP at $4.56 a share.
Shares of CP closed Friday at $63.60 on the TSX.
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