UBS maintains buy rating for Canadian National Railway stock

On Thursday, UBS analysts reaffirmed their Buy rating for Canadian National Railway (TSX:CNR) stock, maintaining a price target of Cdn$174.00. The company, currently trading at $106.09 with a market cap of $66.6 billion, has demonstrated strong financial performance with a 54.8% gross profit margin. The reaffirmation follows an analyst meeting and tour at the Prince Rupert port, which showcased potential growth opportunities in the intermodal container and energy/chemicals carload sectors looking toward 2027 and beyond. According to InvestingPro data, the stock is currently trading near its Fair Value.

The analysts highlighted that significant customer investments are expected to double propane export capacity and increase the capacity for loading plastic pellets and containers to 400,000 annual containers. This is a substantial rise from the 130,000 systemwide export containers loaded in 2024. The company’s strong financial position, with an EBITDA of $6.1 billion and a consistent 30-year dividend payment history, supports these expansion plans.

UBS analysts noted that the discussions during the meeting were positive concerning near-term volumes. They indicated that Canadian National Railway is on course to achieve volume growth in the second half of 2025.

The reaffirmed Buy rating and price target reflect confidence in the company’s strategies and anticipated growth in various sectors, including intermodal containers and energy/chemicals.

Canadian National Railway, listed on both the Toronto Stock Exchange (CNR:CN) and the New York Stock Exchange (NYSE: CNI), is focusing on expanding its capabilities to handle increased demand in the coming years.

In other recent news, Canadian National Railway Company (CN) announced a significant capital investment plan for 2025, committing $3.4 billion CAD to enhance capacity, safety, and sustainability across its North American rail network. This includes $2.9 billion CAD for maintenance and strategic infrastructure in Canada and the U.S., with projects like the installation of over 225 miles of new rail. CN is also investing $600 million CAD in Ontario and $510 million CAD in Alberta to improve track maintenance and infrastructure, focusing on enhancing intermodal capacity and rail efficiency.

Benchmark analysts have maintained a Hold rating on CN stock, noting the company’s first-quarter earnings per share (EPS) of C$1.85 exceeded expectations, driven by strong revenue performance. Despite potential economic challenges, CN retains its full-year EPS growth target of 10%-15% based on anticipated revenue ton-miles (RTMs) and pricing strategies. Meanwhile, Stephens analyst Justin Long raised the price target for CN shares from $105.00 to $109.00, citing better-than-expected first-quarter performance and sustained revenue growth per carload.

CN has expressed caution regarding near-term volume predictions due to macroeconomic factors and less favorable foreign exchange rates, yet remains optimistic about meeting its revenue and EPS growth projections. The company continues to recover from early first-quarter weather disruptions, with most growth projects advancing as planned. These developments indicate CN’s ongoing commitment to maintaining a resilient and efficient rail network.

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