Canadian Pacific Railway (CP CN) Canada
Industrials
The STB approved CP’s acquisition of Kansas City Southern which will lead to the creation of Canadian Pacific Kansas City (CPKC) on 14th April. Robert Crimes expects extensive revenue synergies from the only single-line railroad to link Canada, US and Mexico. He considers CPKC best positioned to benefit from cross continental American trade that has grown notably strongly since the USMCA in mid-2020. Robert estimates total revenues +4.6% CAGR (volumes +1.6%, prices +3.0%) and EBITDA +5.7% CAGR in 2024-50E. His DDM based TP is C$218 (+110% upside) which implies an EV/EBITDA of 25.9x in 2024E, reducing to 16.1x in 2030E given high EBITDA growth.
Edition: 157
- 31 March, 2023