On Friday, Stifel analysts adjusted their outlook on Canadian National Railway (TSX:CNR) (NYSE:CNI) shares, increasing the price target to $125 from the previous $120, while reiterating a Buy rating on the stock. The revision follows the company's fourth-quarter earnings report, which was characterized as satisfactory but not exceptional by the analysts. According to InvestingPro data, CNI currently trades near its 52-week low of $98.96, with analyst targets ranging from $107.42 to $141.76, suggesting potential upside opportunities.
Canadian National Railway's management has provided guidance forecasting 10%-15% growth in earnings per share (EPS), despite acknowledging challenging comparisons in sectors like grain and the potential impact of tariffs. The company maintains impressive gross profit margins of 54.63% and boasts a solid financial health score from InvestingPro. Stifel's Benjamin Nolan noted that while the company has faced a year of disruptive factors, there is potential for earnings growth. However, he also suggested that reaching the higher end of the company's guidance range might be overly optimistic, a view supported by 22 analysts recently revising their earnings expectations downward.
The analysts' perspective is influenced by the stock's performance over the past year, which has seen a decline in share price both relatively and in absolute terms, with a -13.42% total return over the past year. Nolan believes that the current low expectations for the stock create an opportunity for a "catch-up trade," suggesting that the stock's valuation could improve going forward. The company's strong fundamentals include a 29-year track record of consecutive dividend increases, demonstrating consistent shareholder returns despite market fluctuations.
The price target increase by Stifel reflects a confidence in Canadian National Railway's ability to grow earnings and recover from the previous year's disruptions. The Buy rating indicates that the firm remains positive about the stock's future performance despite the modest assessment of the recent quarter's results.
Investors will be watching closely to see if Canadian National Railway can meet its ambitious EPS growth targets and if the stock will indeed experience the rebound that Stifel analysts anticipate. The company's efforts to navigate through the challenges of tariffs and sector-specific headwinds will be critical to achieving these goals.
In other recent news, Canadian National Railway (CN) has seen a series of significant developments. The company's fourth-quarter earnings report for 2024 revealed an adjusted earnings per share (EPS) of C$1.82, falling short of market expectations. Despite this, Citi analyst Ariel Rosa updated CN's price target to $122 while reaffirming a Buy rating. In contrast, JPMorgan analyst Brian Ossenbeck reduced the price target for CN to C$174.00, while maintaining an Overweight rating.
CN's recent financial performance showed a 2% year-over-year increase in earnings per share, reaching $1.72 in the third quarter of 2024. However, Q4 revenues are expected to fall by 2.3% to $4,370m CAD due to disruptions. The company has reached new labor agreements with Unifor and the International Brotherhood of Electric Workers (IBEW), which are expected to provide stability and support for CN's operations.
Several firms have upgraded CN's stock recently. Stifel upgraded the stock from Hold to Buy, Jefferies raised its rating from Hold to Buy, Evercore ISI increased its rating to Outperform, and Citi upgraded the stock from Neutral to Buy. These upgrades reflect potential for growth and an expectation of improved financial performance. These are recent developments and investors are advised to conduct their own due diligence before making any investment decisions.
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