30 April 2010

Analysts Praise Canadian Pacific Results

Shares in Canadian Pacific Railway Ltd. are on the move, as the Street shower's the country's second-biggest railroad with praise following better-than-expected earnings results announced Wednesday.
 
Back of above $60, and closing in on a new 52-week high, analysts think CP stock has plenty of upside still to come.
 
"We consider the strong Q1 results to be a key catalyst for the CP shares, as we believe investors had discounted CP's ability to significantly realign its cost base," Walter Spracklin, an analyst at RBC Capital Markets, said in a note to clients.
 
Mr. Spracklin maintained his "outperform" rating and raised his price target to $70 from $65.
 
He said he expects substantial upward earnings revisions, leaving his "street-high" 2011 estimate of $4.66 unchanged.
 
"We are increasing our target multiple on the CP shares to 15x (from 14x) on the back of the improving economy and CP's leverage to this improvement, the analyst wrote.
 
Trading at roughly 11x his revised 2011 earnings estimate of $4.65, Raymond James analyst Steve Hansen said CP is trading at a discount to its peers. He increased his price target to $70 from $65 and reiterated his "buy" rating,
 
"Looking forward, sustained potash and coal volumes through 2Q will continue to trounce last year's paltry comps, in our view," he told clients.
 
"Healthy merchandise and intermodal improvements, coupled with plenty of idle capacity still in the system, should also facilitate further operating and financial gains."
 
David Pett.