Inside the Market\u2019s roundup of some of today\u2019s key analyst actions<\/p>\n
Canadian National Railway (CNR-T<\/a>) is taking a hit in the analyst community this morning following disappointing quarterly results late Tuesday and the withdrawal of its forward guidance. <\/p>\n Among the analyst actions were:<\/p>\n *Atb Capital Markets cut its price target to C$150 from C$155 and reiterated a \u201csector perform\u201d rating; <\/p>\n *JP Morgan cut its target to C$154.00 from C$163.00 and downgraded its rating to \u201cneutral\u201d from \u201coverweight\u201d; <\/p>\n *National Bank of Canada cut its target to C$150 from C$170 and downgraded its rating to \u201csector perform\u201d from \u201coutperform\u201d; <\/p>\n *Scotiabank cut its target price to C$153 from C$165 but reiterated a \u201csector outperform\u201d rating;<\/p>\n *TD Cowen cut its target price to C$165 from C168 but reiterated a \u201cbuy\u201d rating; <\/p>\n *BMO cut its price target to C$163 from C$168 but reiterated an \u201coutperform\u201d rating;<\/p>\n *RBC cut its price target to C$157 from C$161 and reiterated an \u201coutperform\u201d rating; <\/p>\n *Barclays cut its target price to C$135 from C$145.<\/p>\n *Citi cut its target to US$121 from US$123 but reiterated a \u201cbuy\u201d rating<\/p>\n The average analyst price target is now C$159.14, down from C$162.73, according to LSEG data just ahead of today\u2019s market open.<\/p>\n The stock opened down just over 4% in Toronto trading, at C$131.<\/p>\n The second quarter results themselves weren\u2019t too far off the mark. Revenue of $4.272 billion was only slightly below the consensus expectation of $4.337 billion. Adjusted EPS of $1.87 met the consensus forecast. <\/p>\n But CN\u2019s outlook has rattled analysts and investors. <\/p>\n The railway lowered its 2025 guidance to EPS growth in the mid-to-high single digits versus the prior guide of 10-15% growth. CN also removed its longer-term 2024-26 financial targets, which was high single-digit annual EPS growth, due to macro uncertainty related to trade and tariffs.<\/p>\n \u201cWe note that consensus currently sits at 9% growth for 2025, below the low end of the prior guide, but given management\u2019s public confidence in hitting the prior guidance throughout the first half of 2025, the new guide is bound to disappoint,\u201d commented National Bank analyst Cameron Doerksen.<\/p>\n CN cited trade and tariff uncertainty as the reasons for the lower guidance as well as a stronger Canadian dollar versus expectations early in the year. <\/p>\n So far early in the third quarter, CN\u2019s overall Revenue Ton Miles (RTM) are down 6.5% year over year and management is now assuming full-year RTM growth in the low single digits versus the prior assumption of low-to-mid-single digits, noted National Bank. Relative to prior expectations, CN sees incremental softness in international intermodal due to tariff uncertainty as well as in forest products due to new softwood lumber duties coming on in the third quarter as well as a still weak housing market. <\/p>\n Mr. Doerksen said he decided to downgrade his rating \u201cas we see few reasons for the stock to move meaningfully higher in the short-to-midterm.\u201d<\/p>\n \u201cWe previously valued CN shares by applying a 20.0x P\/E multiple to our 2026 EPS forecast. To better reflect what we expect will be lingering headwinds to valuation in the near-to-medium term, we are lowering our valuation multiple to 18.0x. Along with some downward adjustments to our forecasts (2026 EPS forecast moves to $8.31 versus $8.52 previously), this results in a new target,\u201d Mr. Doerksen said.<\/p>\n TD analyst Cherilyn Radbourne suggested any selloff in shares would be limited by the fact they\u2019ve already fallen so far this year and are cheaper than peers on a valuation basis. <\/p>\n \u201cCN has cut guidance for the third year in a row, and we do not expect the stock to attract much investor interest until volumes return to growth, particularly not with the Street\u2019s attention focused on potential M&A among the peers. That said, we maintain our buy rating, because we find it hard to downgrade CN when it trades at such a wide discount vs. the peers and just about 5% above its 52-week low,\u201d Ms. Radbourne told clients in a note. <\/p>\n That attractive valuation compared to peers was also noted by Raymond James analyst Steve Hansen, who maintained an \u201coutperform\u201d rating and C$162 price target. <\/p>\n \u201cNotwithstanding persistent macro uncertainty, we continue to recommend shares of Canadian National Railway based upon: 1) our constructive view of CN\u2019s 2H25 traffic outlook (improving trade certainty, self-help initiatives, easy comps); 2) tangible evidence of improved network fluidity; and 3) the stock\u2019s attractive relative valuation (cheapest Class 1 rail),\u201d Mr. Hansen said.<\/p>\n RBC analyst Walter Spracklin also foresees limited damage to the stock from the results Tuesday, in part because of solid operating performance. <\/p>\n \u201cEncouragingly, the company\u2019s operations were solid, with the network running fluidly – evidenced by a 1% improvement in car velocity, a 1% improvement in dwell, a 4% improvement in train delays and 11% higher GTMs\/T&E Employee. Whereas operations had been a concern in 2024, it is our view that the overall network fluidity is a success factor for the company in 2025,\u201d Mr. Spracklin said. <\/p>\n CN also announced a change in its executive ranks. Remi G. Lalonde departs as chief commercial officer, with Janet Drysdale fulfilling that role on an interim basis. <\/p>\n Scotia analyst Konark Gupta called Ms. Drysdale a versatile executive and didn\u2019t have a concern with the change. <\/p>\n Mr. Gupta also thinks there could be a buying opportunity in the works.<\/p>\n \u201cWe see value at current levels, even before further potential pullback, for a world-class, irreplaceable asset that has been facing back-to-back transient issues,\u201d he said in a note. \u201cWe are pleased with the resilience in operations (car velocity) and cost control. We would be buyers on further dips.\u201d<\/p>\n ***<\/p>\n Scotiabank analysts led by Phil Hardie released a new outlook for the diversified financials sector, which included a number of price target changes and an update on top picks. <\/p>\n \u201cWe continue to prefer stocks with relatively low valuations that offer attractive returns with upside driven by a combination of earnings, book value, or NAV growth and dividend yields,\u201d the Scotia analysts said in the introduction of the report. \u201cWe think valuation disparities are too wide to ignore and believe value-oriented names offer the biggest upside opportunities over the coming 12 to 18 months.\u201d<\/p>\n Scotia said Power Corp. (POW-T<\/a>) remains its top pick for 2025 and Trisura Group Ltd. (TSU-T<\/a>) is its top small cap idea given an attractive risk-reward. Its target on Power Corp. went to C$59 from $57, while Trisura\u2019s target was nudged up by C$1 to C$51.<\/p>\n The following were among stocks also seeing price target changes, along with select commentary highlights:<\/p>\n Fairfax Financial Holdings Ltd (FFH-T<\/a>): Scotiabank raises price target to C$2,900 from C$2,500 with a \u201csector outperform\u201d rating.<\/p>\n Scotia said Fairfax displays an attractive combination of value and low risk growth. \u201cWe think stocks such as Fairfax are particularly well-positioned for the current environment and market conditions given its combination of relatively low valuation and macro sensitivity and healthy underlying growth profile. We believe the stock has earned a sustainable valuation re-rate on the back of the organic expansion of its insurance operations and significantly higher operating net investment income driven by enhanced interest and dividend yields and investment float. We expect these levels of earnings contribution to be sustainable over the next few years and have enhanced the company\u2019s ROE and growth rate potential of its book value while also adding greater consistency to both of these metrics. Further, given its value investing approach, we think it has the potential to continue to generate outsized investment returns \u2013 even against a backdrop of more modest equity market returns. The company has demonstrated resilience through the business cycle and turbulent financial markets, but we view it as a less defensive play than more traditional publicly listed insurers. At this stage of the market cycle, this provides an attractive balance: downside protection thanks to the relative resilience of insurance operations through a potential recession and upside potential when markets recover.\u201d<\/p>\n Element Fleet Management Corp (EFN-T<\/a>): Scotiabank raises price target to C$40 from C$33.<\/p>\n \u201cStrong free cash flow generation and evolution to a more capital-light business model likely support solid and predictable return of excess capital that includes share buybacks, which we believe could translate this double-digit earnings growth into mid-teen EPS growth. Minimal credit cycle exposure and interest rate sensitivity, combined with its resilience and growth prospects, position Element Fleet well to be a core portfolio holding.\u201d<\/p>\n Intact Financial Corp (IFC-T<\/a>): Scotiabank raises target price to C$325 from C$318.<\/p>\n \u201cWe remain constructive on Intact in the current market environment, given its defensive characteristics, solid growth outlook, and sustainable mid-teens ROE supported by the favourable pricing environment. M&A is a potential embedded catalyst. Given Intact\u2019s current levels of excess capital and progress with the RSA integration, we believe deal activity is imminent over the next 12 to 24 months.\u201d<\/p>\n Propel Holdings Inc (PRL-T<\/a>): Scotiabank raises target price to C$43 from C$38.<\/p>\n \u201cWe view Propel as a small, but profitable and high-growth fintech player set to accelerate its expansion as a disruptor in the large global non-prime consumer loan space. The company has multiple potential growth avenues and is led by a strong, growth-minded management team, supported by an experienced board of directors. Its equity financing as part of its IPO in 2021, coupled with ample debt capacity on hand provides the company with the capital required to extend its track record of strong growth. We anticipate that Propel\u2019s advanced AI credit underwriting processes, coupled with its digital architecture, will enable it to further disrupt the consumer lending space and better penetrate underserved markets.\u201d<\/p>\n TMX Group Ltd (X-T<\/a>): Scotiabank raises target price to C$63 from C$57<\/p>\n Goeasy Ltd (GSY-T<\/a>): Scotiabank raises target price to C$230 from C$205<\/p>\n ***<\/p>\n Jefferies analyst Sam Burwell raised his target price to C$72 from C$65 on Enbridge Inc (ENB-T<\/a>) while upgrading his rating to \u201cbuy\u201d from \u201chold\u201d.<\/p>\n He said the company\u2019s wide asset base provides it with the opportunity to pursue diverse projects and supports confidence in the company\u2019s EBITDA growth potential. <\/p>\n ***<\/p>\n In other analyst actions;<\/p>\n Altagas Ltd (ALA-T<\/a>): Jefferies raises target price to C$46 from C$40<\/p>\n Gibson Energy Inc (GEI-T<\/a>): Jefferies raises target price to C$28 from C$23 and upgrades rating to buy from hold<\/p>\n Paramount Resources Ltd (POU-T<\/a>): Jefferies raises target price to C$25 from C$21<\/p>\n Pembina Pipeline Corp (PPL-T<\/a>): Jefferies cuts target price to C$53 from C$61 and downgrades rating to \u201chold\u201d from \u201cbuy\u201d<\/p>\n South Bow Corp (SOBO-T<\/a>): Jefferies raises target price to C$37 from C$33<\/p>\n TCP Energy Corp (TRP-T<\/a>): Jefferies cuts target price to C$68 from C$71<\/p>\n Topaz Energy Corp (TPZ-T<\/a>): Jefferies raises target price to C$31 from C$28<\/p>\n General Electric (GE-N<\/a>): Barclays raises target price to US$295 from US$230; Wells Fargo raises target price to US$38 from US$34<\/p>\n