Market Overview

UBS Expects 'Smooth' Leadership Transition At Canadian National Railway


UBS analysts Thomas Wadewitz, Alex Johnson and Michael Triano expect a smooth transition in Canadian National Railway (NYSE: CNI) to its CFO, Jubin Luc Jobin, following the stepping down of its CEO, Claude Mongeau, at the end of June. The brokerage continued to have Neutral rating and C$83.00 as its price target.

The brokerage said current CFO Luc Jobin would assume the CEO position effective July 1. Mongeau was credited for consistently delivering double-digit annual EPS growth and strong OR performance. Last August, Mongeau took a medical leave to undergo throat surgery and he returned to his CEO post earlier this year.

UBS said supply chain/volume growth strategy was a successful hallmark of Mongeau's six and a half year period as CEO and customer focus that were clear drivers of the company's strong volume performance in 2011-2014. However, CN has faced meaningful cyclical pressure in 2015-2016, along with the rest of the rail industry, which has been a headwind to recent volume performance.

The analysts said, "We expect a seamless transition to the leadership of Mr. Jobin Luc Jobin has been the CFO and a key member of CN's executive team for the last seven years. Mr. Jobin coordinated CN's management team while Mr. Mongeau was on medical leave in the fall of 2015."

The brokerage believes Jobin and the rest of the company's experienced management team would continue to focus on the tactics, which have been in place for a number of years. The analysts said, "We expect a seamless transition."

Latest Ratings for CNI

Apr 2019DesjardinsDowngradesBuyHold
Apr 2019CitigroupMaintainsBuyBuy
Jan 2019Credit SuisseUpgradesNeutralOutperform

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Posted-In: UBSAnalyst Color Reiteration Analyst Ratings


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