By Adriano Marchese
Canadian National Railway shares fell Wednesday after it cut its forecast for the year and scrapped longer-term targets, even as some analysts pointed to improving operational efficiency and the stock's cheaper valuation.
Shares traded 3.8% lower at 131.41 Canadian dollars ($96.58).
The Canadian railroad cut its full-year earnings guidance to mid-to-high single-digit growth, down from its previous guidance for 10% to 15% growth.
Moreover, because of a number of challenges, including the U.S. tariff situation and broader trade volatility, the management withdrew all its financial predictions for the next few years. The move suggests that there is too much uncertainty to make reliable long-term projections at the moment.
Still, while analysts broadly expected the guidance changes, they remain optimistic that the railroad can make the best of what they can control.
"We do see a silver lining with CN Rail focused on controlling the controllables," CIBC's Kevin Chiang said, pointing to the fluidly run network and CN Rail's commitment to growing domestic margins at its intermodal segment.
Raymond James' Steve Hansen thinks that despite the overall uncertainty in the economy, the stock is still worth buying, especially at a discount to peers. He noted there are signs of improving traffic outlook in the second half of the year, particularly as trade stabilizes, operations are optimized, and the company laps an easier year.
In its second quarter, CN Rail logged a net income of C$1.17 billion, or C$1.87 a share, up from C$1.11 billion, or C$1.75 a share, from the prior year.
Adjusted earnings were C$1.87, just ahead of analyst consensus expectations of C$1.86 a share, according to FactSet.
Revenue came in at C$4.27 billion, below Wall Street's expectations of C$4.33 billion and the C$4.33 billion in sales the year prior.
The decline was largely due to lower revenue in its petroleum and chemicals, metals and minerals and forest products divisions, but were partially offset by growth in grain and fertilizers.
Write to Adriano Marchese at adriano.marchese@wsj.com
(END) Dow Jones Newswires
July 23, 2025 10:30 ET (14:30 GMT)
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