UPDATE: Evercore ISI Upgrades Canadian National Railway (CNI) to Outperform

Evercore ISI analyst Jonathan Chappell upgraded Canadian National Railway (NYSE: CNI) from In Line to Outperform.

The analyst comments "When we downgraded CNI to In Line in September 2021, the stock had recently massively outperformed the peer group and was trading at a multi -turn P/E premium on the back of an activist investor involvement and the hope of a new “rock star” CEO. In addition, a very ambitious 2022 guidance range seemed to be setting up for future downward revisions. Although the stock has outperformed the U.S. peers YTD (down 10.4% vs. 13.7 - 21.9% declines) as CNI has more commodity -freight exposure and is a TSE safe haven in times of uncertainty, it has still underperformed the U.S. peers by 770 basis points on average (150 -1320 basis points by stock) since the downgrade, and we’re taking that trade off now for several reasons. First, as already noted, the commodity -freight exposure (p. 17) and safe -haven status provides a relative level of comfort amid widespread macro and geopolitical uncertainty. Second, the new management team (though not the “rock star” desired) has more appropriately reset the 2022 guidance range as of April (though there is still some risk to it as fuel continues to rise), lessening the risk of material downside revisions. Finally, the upside from our Base Case scenario price target now ranks #3 overall, while CNI moves up to #2 in our 2022 rank file and a tie for #2 in 2023 (excluding Capital Returns) based on our new estimates. As such, we now rate CNI as Outperform."

For an analyst ratings summary and ratings history on Canadian National Railway click here. For more ratings news on Canadian National Railway click here.

Shares of Canadian National Railway closed at $110.09 yesterday.

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