Morgan Stanley analysts upgraded shares of Canadian National Railway Company (TSX:CNR) to Overweight from Equal-Weight, raising the firm's price target on the stock to CAD 200 from CAD 254 in a note to clients on Friday.
The analysts told investors that CNR's clear and credible plan is not priced into the stock. "We leave CNR's 2023 Investor Day more bullish on normalized earnings power," said the analysts.
"CNR's 3-yr target of 10-15% EPS growth was comfortably ahead of MSe (8% CAGR) and consensus (10% CAGR) and will be achieved through a combination of going back to basics on plan implementation while also pursuing future growth opportunities," they added.
The analysts stated that CNR's Investor Day did not disappoint, and they are "particularly pleased to hear management not focus on cost-cutting" and continuing "CNR's long-standing growth approach — albeit in a manner that is likely to deliver a greater chance of success."
"If this guidance has the traditional conservatism of CNR (which does appear to be the case because EPS guidance implies roughly 1/3rd of the pipeline volume growth rate), CNR could have amongst the highest EPS growth rate in our coverage through 2026," they added.