Analyst upgrades CN and CP earnings estimates

Raymond James Financial Services analyst Steven Hansen told clients in a note Thursday that railroad recovery in Canada has reached a state of “reasonable health and vigor,” and he accordingly upgraded earnings estimates for both Canadian National and Canadian Pacific.

He increased his price target for CP to $68 a share from a previous $65 and maintained an “outperform” rating. He increased his target for CN to $67 from $54.50, with a “market perform” rating that reflected an earlier run-up in the price.

“Weekly volumes are not only improving, but also surging to fairly robust levels—in some cases recovering to pre-recession levels,” Hansen said.

He noted that CN carload freight traffic increased 14.6% in the first quarter compared to the 2009 quarter, and CP carloads grew 9.1%.

Both railroads will report their first-quarter earnings late in April.