Dahlman Rose Downgrades Canadian National Railway (CNI) to Hold; Valuation Call
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Price: $128.79 --0%
Rating Summary:
12 Buy, 21 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 7 | Down: 9 | New: 45
Rating Summary:
12 Buy, 21 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 7 | Down: 9 | New: 45
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Dahlman Rose downgraded Canadian National Railway (NYSE: CNI) from Buy to Hold.
Dahlman analyst says, "The share price has exceeded our price target, and the current valuation is not compelling enough to support a significant price target increase. The shares currently trade at around 14x our 2012 EPS estimate, above the company's five-year average and largely in-line with the company's 10-year historical multiple. While the shares could trade somewhat above the historical multiple in the coming weeks due to the company's position as one of the best-managed North American railroads, it would have to occur in the midst of an increased level of macro uncertainty and the slow rate of rail volume growth. On the fundamental side, the company already runs extremely efficient operations, with operating ratios in the low 60's, the lowest in the industry. In our opinion, this limits significant margin upside from this point, at least in the short-term. While we continue to believe Canadian National is a great company with an excellent record of sound execution, we believe greater share price upside lies with other Class I's such as CSX (NYSE: CSX) ($30), Union Pacific (NYSE: UNP)($117), and Norfolk Southern (NYSE: NSC)( $84)."
For more ratings news on Canadian National Railway click here and for the rating history of Canadian National Railway click here.
Shares of Canadian National Railway closed at $79.01 yesterday.
Dahlman analyst says, "The share price has exceeded our price target, and the current valuation is not compelling enough to support a significant price target increase. The shares currently trade at around 14x our 2012 EPS estimate, above the company's five-year average and largely in-line with the company's 10-year historical multiple. While the shares could trade somewhat above the historical multiple in the coming weeks due to the company's position as one of the best-managed North American railroads, it would have to occur in the midst of an increased level of macro uncertainty and the slow rate of rail volume growth. On the fundamental side, the company already runs extremely efficient operations, with operating ratios in the low 60's, the lowest in the industry. In our opinion, this limits significant margin upside from this point, at least in the short-term. While we continue to believe Canadian National is a great company with an excellent record of sound execution, we believe greater share price upside lies with other Class I's such as CSX (NYSE: CSX) ($30), Union Pacific (NYSE: UNP)($117), and Norfolk Southern (NYSE: NSC)( $84)."
For more ratings news on Canadian National Railway click here and for the rating history of Canadian National Railway click here.
Shares of Canadian National Railway closed at $79.01 yesterday.
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