10 October 2007
CPR Target Raised; CNR's Reduced
Blackmont Capital has reiterated "hold" ratings on
Canada's two national railways but, using a valuation approach that melds multiples of price/earnings, EBITDA, and discounted cash
flow, raised the price target on Canadian Pacific Railway Ltd. and lowered it for Canadian National Railway Co.
Analyst Avi Dalfen's bumped up his CPR target to $78.50 from $72.75, noting that despite headwinds impacting earnings growth, the
railway has the advantage of having the least exposure to U.S. economic slowing. The stock ended Tuesday at $71.80 on the TSX.
CNR's target, however, drops to $59.75 from $63 as expectations for improving U.S. economic activity in the second half this year
haven't materialized, he notes, citing continued deterioration in the U.S. housing sector. It closed at $54.73 on the TSX
Tuesday.
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