(The following appeared on the National Post website on July 23.)
OTTAWA — Canadian Pacific Railway Ltd.’s worse-than-expected second quarter results this week led to a series of earnings estimate revisions Wednesday.
Walter Spracklin, RBC Capital Markets analyst, reduced his 2008 and 2009 guidance by about 7% due in part to higher fuel costs and weak economic conditions.
He said he expects earnings per share of $4.13 in 2008, and $4.85 in 2009, down from $4.45 and $5.23 respectively. He also introduced a 2010 estimate of $5.46 a share. He also reduced his price target to $68 a share from $73, but maintained his “sector perform” rating.
Avi Dalfen, Blackmont Capital analyst, likewise reduced his earnings per share estimates to $4.05 for 2008, down 28¢, and $4.68 in 2009, down 11¢. He lowered his price target to $70.50 from $75 previously, but maintained his “hold” rating.
Fadi Chamoun, UBS analyst, also lowered his estimate to $4.10 a share for 2008, down from $4.19, and to $5.07 in 2009, down from $5.22.
“Despite weak results in the second quarter and lowered guidance of a magnitude greater than anticipated, we remain constructive on our view of CP shares. We believe the second quarter marks an inflection point for CP as we expect earnings to benefit from accelerated pricing growth, improved fuel recovery, easier comps and moderating foreign exchange headwind going into the second half of 2008 and 2009,” Mr. Chamoun said in a note to clients.
He has an $80 price target and a “buy” rating on the stock.