30 August 2007
CPR Upgraded to "Outperform"
Canadian Pacific Railway Ltd.'s stock price is 14.5 percent below
the price target of $81 set by RBC Dominion Securities, prompting an upgrade to "outperform" from "sector perform"
from analyst Walter Spracklin.
The shares have declined nearly 20 percent from a mid-July high, when the railway was being steered by takeover
speculation.
At Wednesday's closing price of $71.56 on the TSX and, without that premium built in, the shares represent a "good entry for
investors to accumulate a position", he writes.
He calls CPR a "core holding", given its strong bulk franchise, exposure to the booming economy of Western Canada, and
opportunities to realize further productivity gains.
The shares are currently trading at 13.3 times his 2008 estimates, which is slightly above the level for Canadian National Railway Co.
and the average for the U.S. Class 1 railways, he adds.
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