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UPDATE: Salman Partners Reccomends to Buy Canadian Pacific Railway, Increasing Estimates Following 3Q13 Results

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In a report published Thursday, Salman Partners analyst Kam Mangat increased their recommendation for Canadian Pacific Railway Limited (NYSE: CP) from Hold to Buy and raised the PT from $136 to $167 per share after strong 3Q13 results.

Canadian Pacific reported adjusted EPS of $1.88 above Salman estimates of $1.69, excluding the $7M one-time tax charge. The company reported a 5.7 percent increase in revenues and a company record for the operating ratio of 65.9 percent due to cost management and productivity improvements.

Salman Partners noted numerous factors that will continue to support strong price performance. Mangat included operating ratio improvements, implementation of a share buy back program or dividend increase, market share increase, potential asset sales, and potential acquisitions.

The analyst commented that management expects the operating ratio to reach 65 percent in 2014 and 63 percent in 2015. As a result, Salman raised their 2015 estimated EPS to $10.17 and potential PT of $178. Mangat further noted, “In addition to the potential sale of DM&E near term, CP is also expected to generate cash through asset sales related to the four hump yards which were closed during 2012 (~$2 billion in value).”

Canadian Pacific Railway closed at $142.99 on Wednesday.

Posted-In: Kam Mangat Salman PartnersAnalyst Color Upgrades Price Target Analyst Ratings


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