(The following report by Scott Deveau appeared on the National Post website on January 10.)
OTTAWA — The continued threat of economic weakness in the U.S. has resulted in reduced earnings estimates at both of Canada’s largest railways ahead of their fourth quarter earnings by Blackmont Capital analyst Avi Dalfen.
In a note to clients, he said that due to “softening economics and rising costs in the U.S. and Canada” he was lowering his earnings estimates for both Canadian National Railway Co. and Canadian Pacific Railway Ltd.
Mr. Dalfen now expects CN, which will report fourth quarter results on Jan. 22, to turn in 87¢ per share in earnings for the final quarter of 2007, while the Street sits at 89¢, and $3.37 a share for the year.
He also adjusted his 12-month price target to $52, down from $58 a share, and maintained his ‘hold’ rating on the stock.
For CP, which will report is fourth quarter results on Jan. 29, Mr. Dalfen expects earnings per share of $4.23 for 2007, down 5¢ from his previous estimate. He also revised his 12-month target to $67 a share, down from $74.25, after rolling over his estimates to 2009. He has a ‘hold’ rating on the stock.