Canaccord Genuity analyst David Tyerman has downgraded Canadian National Railway Co. to a "hold" from "buy," due to recent share price appreciation.
But his outlook on the stock remains positive, and he modestly boosted his price target (to $83 from $81) and some of his financial forecasts for the railway amid solid growth in shipment volumes.
While he expects solid growth in 2012, earnings won't be quite as robust as they were in 2011.
"We are projecting 9 per cent earnings per share growth in 2012, down from 14 per cent in 2011. We expect normal sales growth (volume growth of GDP plus 0.5-1.0 per cent, sustainable price growth of inflation, plus a small premium), and we project a flat operating ratio in 2012," Mr. Tyerman said in a note.
He expects a return to double-digit earnings per share growth in 2013.
Mr. Typerman continues to rate Canadian Pacific Railway Ltd. as a "buy," and raised his price target to $80 from $66 to reflect the possibility that Pershing Square's push for new management is successful and spurs greater-than-project financial improvements.
Bombardier Inc.'s appointment of Mike Arcamone as president of Bombardier Commercial Aircraft is being received positively by Desjardins Securities Inc. analyst Benoit Poirier, but he is not changing his targets on the stock.
Effective Feb. 1, 2012, Mr. Arcamone will replace retired president Gary Scott. Mr. Arcamone has an extensive history in the automotive industry, where he worked for 30 years in North America, Europe and Asia.
Most recently he was president and CEO of GM Korea, where he ran that company's multi-billion dollar export-oriented business.
"We view this appointment positively, given Mr. Arcamone's past positions at a large manufacturing, export-oriented organization," says Mr. Poirier. "Although aerospace is a new industry for Mr. Arcamone, we believe that many of the skills he acquired in the automotive industry are transferable to the aerospace industry. Mr. Hachey successfully made a similar transition and we would expect Mr. Arcamone to do the same. In addition, we view positively his experience in Asia, a key growth region for Bombardier."
Upside: Mr. Poirier is maintaining his "buy" rating and $7.50 price target.
CIBC World Markets Inc. analyst Mark Petrie sees a well-run company with a strong brand continuing to drive market share gains in Bauer Performance Sports Ltd.
Strong second-quarter results highlighted by revenue growth of 27 per cent and continued market share was driven by Bauer's hockey products. "The product pipeline at Bauer remains robust,' says Mr. Petrie. "The pace of revenue growth will moderate from the first half, but we expect market share to climb again in fiscal 2012."
He adds that margins are healthy and internal cash flows should fund growth and reduce leverage.
Upside: Mr. Petrie maintained his price target of $8.50 and rating of "sector outperformer."
Raymond James Ltd. analyst Steve Hansen is increasing his target price for Exchange Income Corp. in light of its letter of intent to acquire aviation services provider Custom Helicopters Ltd for $29-million in cash and stock.
Mr. Hansen sees lots to likes in the deal, namely the rich margins, complimentary services and stable cash flow inherent in the rotary business. He also likes the two companies' long working history and EIF's medevac expertise, customer relationships, and strong northern infrastructure.
"We believe the knowledge and expertise gleaned from acquiring Custom will facilitate future acquisitive growth opportunities in rotary, a large and highly fragmented industry in Canada's north," says Mr. Hansen.
Upside: In addition to increasing his target price by $2 to $30, he is reiterating his "outperform" rating.