Canadian National upgraded by Bank of America on volume gains, attractive valuation

Bank of America has raised its standing connected Canadian National Railway (NYSE:CNI) shares to ‘Buy’ from ‘Neutral,’ citing improvements successful service, measurement growth, and an charismatic valuation erstwhile compared to its peers.

The steadfast besides raised its terms people connected Canada’s largest freight railway to US$122 from US$117, implying upside from existent levels of astir US$110.

In a enactment to clients, Bank of America highlighted that Canadian National is posting stronger-than-expected measurement gains. “Revenue ton miles are up 3% Q1 to day versus our 0.5% target, and supra CPKC’s 1.2% Q1 to date; carloads were up 1.7%, supra our anterior 0.2% target,” the analysts wrote.

The slope wrote that these results are up of the company’s level full-year target, supported by grounds Canadian atom shipments and above-target intermodal and car volumes.

Service metrics are besides showing improvement, with recently appointed COO Patrick Whitehead credited for operational gains.

Bank of America noted that “average velocity is up 6.7% year-year, good up of radical mean 3% increase.” Despite these improvements, Canadian National shares are trading astatine a discount to peers, the analysts said, suggesting country for upside.

The steadfast besides identified atom and fertilizers arsenic cardinal drivers of measurement growth. Revenue ton miles successful these categories were up 13% year-over-year, compared to Bank of America’s anterior 6% target. Intermodal volumes besides exceeded expectations, rising 4% versus the anterior -1% target.

However, the analysts cautioned that measurement fundamentals could decelerate successful the 2nd 4th owed to premix impacts, substance surcharges, and the lack of c taxation revenues.

Bank of America raised its terms people to US$122, reflecting 21.5 times expected 2026 net per share, up from 20.5 times previously.

“CN is trading astatine a 3-turn discount to peers (18x versus peers 21x average) driven by operating misses implicit the past fewer years,” they wrote, and noted further upside imaginable from the company’s $3 cardinal buyback program.

Earnings estimates were modestly increased, with first-quarter and full-year 2026 EPS projected astatine C$1.77 and C$7.80, respectively, up from anterior forecasts of C$1.74 and C$7.75.