Argus Raises Its Canadian Pacific Price Target To $165

The challenges being faced by Canadian Pacific Railway Limited (USA) CP already seem to be factored into its share price, Argus’s John Eade said in a report. He maintained a Buy rating on the company, while raising the price target from $155 to $165.

Canadian Pacific’s shares have lost 0.3 percent over the past quarter, versus a 3.5 percent gain in the S&P 500. Over the past year, the shares are down 3.0 percent, versus a 3.0 percent gain for the index.

Analyst John Eade pointed out, however, that Canadian Pacific’s shares have outperformed over the past five years, up 133 percent, versus a 68 percent gain for the S&P. He added that the revised price target was near the midpoint of the five-year historical range.

2Q Results

The company reported its 2Q results in-line with lowered expectations and down from last year. Adjusted EPS came in at C$2.05, or US$1.56, representing a 16 percent y/y decline. Total revenues were down 12 percent to C$1.45 billion.

Related Link: Can Canadian Pacific's Cost Controls Position It To Rise Again?

Investment Thesis

“Although Canadian Pacific faces challenging economic conditions and has been hurt by weakness in some of the industries it serves, we believe that these negatives are already factored into the share price,” Eade stated. He added that the company had done well in controlling costs, and would likely generate substantial revenue and earnings growth in 2017.

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