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Investing.com - Evercore ISI has lowered its price target on Canadian Pacific Kansas City Limited (NYSE:CP) to $87.00 from $88.00 while maintaining an Outperform rating on the stock. This target remains above the current analyst consensus, with InvestingPro data showing a broader analyst price range between $72.07 and $95.05. The company is currently trading slightly below its Fair Value, suggesting potential upside opportunity.
The railroad operator reported third-quarter 2025 adjusted earnings per share of C$1.10, in line with Evercore’s forecast but one cent below the average Street estimate. The company posted a third-quarter operating ratio of 60.7%, matching the firm’s projection. Canadian Pacific continues to demonstrate impressive gross profit margins of 52.5% over the last twelve months, according to InvestingPro data, reflecting operational efficiency despite challenges.
Despite a weak start to fourth-quarter volumes, Canadian Pacific Kansas City management confirmed its full-year guidance of a sub-60% operating ratio and earnings per share growth of 10-14%. The company expects to achieve these targets through easy November volume comparisons and strong Canadian and U.S. grain harvests. This outlook aligns with InvestingPro data showing analysts expect full-year EPS of $3.37, though 22 analysts have recently revised earnings estimates downward. CP maintains a perfect Piotroski Score of 9, indicating excellent financial strength - one of several exclusive insights available in the Pro Research Report.
Evercore projects that volume recovery combined with modest year-over-year improvement in revenue per revenue ton mile, lower headcount, improved fuel efficiency, and the absence of a nearly $40 million claim from the third quarter will help the company achieve a sub-57% operating ratio in the fourth quarter.
The firm noted that Canadian Pacific Kansas City has already completed more than 90% of its 37.4-million share buyback program, providing additional support for meeting full-year earnings guidance. Evercore raised its fourth-quarter 2025 EPS estimate to C$1.40 from C$1.38, while maintaining its full-year 2026 EPS forecast at C$5.36.
In other recent news, Canadian Pacific Kansas City reported strong revenue growth in its third-quarter earnings for 2025, with revenue reaching $3.7 billion, slightly surpassing forecasts. However, the company’s earnings per share (EPS) came in at $1.10, just below the expected $1.11. Despite this minor miss in EPS, investor confidence remains steady. In related developments, BofA Securities has adjusted its price target for Canadian Pacific Kansas City to $92.00, down from $93.00, while maintaining a Buy rating. BofA highlighted that the company is on track for its second consecutive year of low double-digit EPS growth, which it considers the best performance among rail companies. These recent developments underscore the company’s solid financial performance and positive outlook among analysts.
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