8 March 2011

CP Rail Raised to Outperform
on Valuation

Toronto Ontario - A series of headwinds that have dragged on shares of Canadian Pacific Railway Ltd. in recent weeks have also created a buying opportunity for investors, according to Steve Hansen, Raymond James analyst.
 
Shares in Canada's No. 2 railway have fallen 7.5% in the past month as its traffic under performed its peers in the first quarter and its head of operations, Ed Harris, announced his sudden retirement last week.
 
But Mr. Hansen said he remains bullish on the long-term prospects of the railway, and raised his rating on the stock to an "outperform" Tuesday.
 
He also raised his price target to $74 a share, from $70 previously, as his rolled his target forward to 2012.
 
"Notwithstanding these recent challenges, we believe CP's future remains bright," he said.
 
Mr. Hansen noted CP's formidable bulk business, exposure to emerging markets, and its aspirations to improve efficiency at the railway despite Mr. Harris's departure.
 
He also said he believed the volume issue was "largely temporary."
 
"Moreover, CP's shares have dramatically under performed its Class I peers since our [15 Oct 2010] downgrade, thereby improving the risk-reward scenario," he said.
 
Scott Deveau.