UBS analyst Fadi Chamount wrote in a note clients:
With C$0.10 in fuel and foreign exchange tailwinds in [the fourth quarter], continued ramp-up at Prince Rupert container terminal and a strong grain crop, CN Rail is poised for a strong close this year.
He raised his 2008 earnings per share guidance on the better-than-expected earnings to C$3.61, from C$3.53, and his 2009 forecast to C$4.09 a share, from C$4.01. “Further, the recent pullback in valuation presents a good buying opportunity in our view,” he added.
David Newman, National Bank Financial analyst, echoed those comments, saying the time to the buy the rail is now. He increased his price target for CNI to C$59 a share, up from C$57, saying the railway has many things going in its favor for a strong finish to the year, not the least of which were the gains it made during the third quarter in operational efficiencies.
In the difficult economic conditions that currently exist, we believe the low-cost producer in an industry, in this case CN, is normally the best bet to weather tough conditions, with above average torque to a recovering economy.