Canadian National Railway (CNI) PT Raised to $137 at Stifel

Stifel analyst Benjamin Nolan raised the price target on Canadian National Railway (NYSE: CNI) to $137.00 (from $134.00) while maintaining a Hold rating.

The analyst commented: "We expect CN's carloads to be up by nearly 4% in Q2 and RTMs to increase ~7% from strengthened grain and P&C shipments. The company's intermodal business rebounded this quarter from increased volumes at the Port of Vancouver and Prince Rupert. At the same time, Halifax has been slower to recover volumes as the Red Sea issues persist. We believe CN is well poised to move more intermodal and bulk traffic following the capacity expansions at Prince Rupert. The lumber segment which has been a drag on volumes has stabilized this quarter and management has seen an uplift in ordering activity. Declining coal volumes are offsetting growth for all the rails and while CN is not entirely an exception, the company moves very little thermal coal in the U.S. as they are focused on Canadian met coal which has not declined in the same way. We are modeling EPS growth of ~9% in 2024 and ~11% and ~9% expansion thereafter in 2025 and 2026. Our second quarter EPS estimate is $1.47 USD / $1.99 CAD which is a touch higher than Factset consensus of $1.42. We expect the company will report $3.3 billion USD of revenue reflecting an 11% y/oy increase which will be offset by the estimated 12% increase in operating expenses bringing Q2 OR 69 bps higher than last year to 61.3%, but sequentially improving 236 bps. Shares have pulled back recently likely in response to the ongoing negotiations with the TCRC and are now trading at 21x to our 2024 EPS estimate of $5.90 USD. We still view current valuations as too high for an attractive entry point therefore we remain Hold-rated at a $137 price target based on shares trading at 21x our 2025 EPS of $6.53. "

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