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Pullback, earnings lead to CP Rail upgrades (The following story by Scott Deveau appeared on the Financial Post website on October 28, 2009.) OTTAWA — The recent pullback in shares of Canadian Pacific Railway Ltd. combined with a better-than-expected earnings this week led to a series of upgrades on the stock Wednesday. CP’s management has been noticeably bearish about the prospects of railway’s volumes returning over the next few quarters. It's carloads remained down 18% during the third quarter, which contributed to a 20% drop in sales. At the same time though, CP delivered its second-straight quarterly result Tuesday that demonstrated that its efforts to contain costs during the downturn have gained traction. “We believe the company’s challenges with regard to its financial position are behind it,” said Benoit Poirier, Desjardins Securities analyst, in a note to clients. “The current share price represents a good entry point for investors and we would buy more shares on weakness.” While Mr. Poirier maintained his $52 a share price target, he upgraded the stock to a “buy” due to “its improved financial position, robust execution and recent share price depreciation.” His comments were echoed by Steve Hansen, Raymond James analyst, who also raised the stock to a “buy” Wednesday. “Given the stock’s sharp pullback in recent weeks, coupled with another quarter of solid cost control, two of the principal factors that previously kept us neutral on the name have now been addressed,” he said, adding that he was maintaining his $55 a share price target. “While concerns still admittedly linger over the pending Teck contract renewal and the timing of a potash recovery, we believe the company’s risk/reward profile has improved and that the emerging operating leverage story more than offsets these concerns.” Thursday, October 29, 2009 © 1997-2010 Brotherhood of Locomotive Engineers and Trainmen

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