Credit Suisse Cuts Price Target on Canadian Pacific Railway Limited (CP), Low Volumes & High Fuel Price/New Guidance

Credit Suisse is maintaining its Outperform rating on shares of Canadian Pacific Railway Limited (NYSE: CP), but is lowering its price target to $80 from $88 due to CP's pre-announced earnings yesterday after the market closed.

The company stated that it now expects Q111 EPS will fall in between $0.12-$0.22, when the firm and Street was previously estimating $0.85 and $0.74 respectively. CP claims that the extreme miss is due to the severity of winter storms and the high fuel prices. Volumes were down 5% QTD and a weaker mix explained the bulk of the miss, estimated to make $0.45 of EPS miss while higher fuel prices make up $0.15-$0.20.

Overlooking the Q1 things continue to remain strong for the company. CP commented that it is increasing resources in order to meet strong demand, the company is maintaining its long term operating ratio target in the low 70's.

Credit Suisse is lowering its 2011 EPS estimate to $3.78 from $4.65 and its 2012 and 2013 to to $5.00 and $5.85 from $5.35 and $6.00. The firms states that, "given that weather is unlikely to hamper results going forward and that the stock has underperformed its peer group YTD, we are not yet willing to throw in the towel on CP."

For more ratings news on Canadian Pacific Railway Limited click here and for the rating history of Canadian Pacific Railway Limited click here.

Shares of Canadian Pacific Railway Limited closed at $65.75 yesterday.

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