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Investing.com - Evercore ISI downgraded Canadian National Railway (TSX:CNR) (NYSE:CNI) from Outperform to In Line and lowered its price target to $105 from $116, citing softer-than-expected volumes that continue to weigh on margin expansion. The stock, currently trading near its 52-week low, maintains impressive gross profit margins of 54.8%. According to InvestingPro data, 16 analysts have recently revised their earnings estimates downward for the upcoming period, though the company’s Fair Value analysis suggests it may be slightly undervalued at current levels.
The railway operator reported second-quarter earnings per share of C$1.87, slightly above the average Street estimate but below Evercore’s forecast. The modest upside was primarily driven by lower-than-projected depreciation, amortization, and interest expenses rather than operational strength. Despite current challenges, InvestingPro analysis shows the company has maintained dividend payments for 30 consecutive years, demonstrating long-term financial stability.
Canadian National Railway has reduced its full-year 2025 EPS guidance to mid-to-high single-digit growth from the previous 10-15% growth target. The company also removed the three-year EPS growth CAGR (ending in 2026) that was introduced at its May 2023 Investor Day.
Several end markets are experiencing outsized impacts from trade challenges, particularly forest products, metals, and autos. The company now expects revenue ton mile growth of low-single-digits for this year, down from previous mid-single-digit projections, while yield headwinds are likely to further affect top-line performance.
Evercore ISI has lowered its full-year EPS estimates for Canadian National Railway to C$7.69 from C$7.86 for 2025 and to C$8.45 from C$8.86 for 2026, noting that share buybacks have come in well below annual expectations, adding further pressure to the EPS outlook.
In other recent news, Canadian National Railway reported its second-quarter earnings, revealing adjusted earnings per share of C$1.87. This figure represents a 1% increase year-over-year but fell short of both Citi’s estimate of C$1.92 and the consensus estimate of C$1.88. Following this earnings report, Citi adjusted its price target for Canadian National Railway to $121.00, maintaining a Buy rating. However, National Bank Financial downgraded the company’s stock rating from Outperform to Sector Perform, reducing its price target to C$150.00, citing limited short-to-midterm growth potential. Similarly, JPMorgan downgraded the stock from Overweight to Neutral, lowering its price target to C$154.00, due to challenges in recovering from disruptions in 2024. Additionally, Canadian National Railway’s Board of Directors approved a quarterly dividend of C$0.8875 per share for the third quarter of 2025. The company also announced the appointment of Janet Drysdale as interim Chief Commercial Officer, succeeding Remi G. Lalonde. Drysdale brings nearly 30 years of experience at the company, having held various executive roles.
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