Goldman Sachs Downgrades Canadian Pacific Kansas City Limited (CP) on Valuation Concerns

Goldman Sachs, on Monday, revisited its outlook on Canadian Pacific Kansas City Limited (NYSE:CP), downgrading the stock rating from Buy to Neutral. With a price target of $91, the firm’s decision comes as a result of the recent change in the target multiple for the company.

While the lowered target multiple aligns with the industry peers, analysts believe that CP is overvalued at its current price of $81.65.

Goldman Sachs Downgrades Canadian Pacific Kansas City Limited (CP) on Valuation Concerns

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The stock is currently trading at a P/E of 27.23x, which is above the target multiple of 22.5x and moderately higher than its five-year average. With a 12-month price target of C$126 (US$91), earnings are anticipated to remain flat at around C$5.64, leaving little room for the stock to rise. As the firm views it, the downgrading isn’t because the company is performing poorly, but due to the valuation concerns. In other words, the stock isn’t cheap enough to be excited about at the current price.

Similarly, the one-year price target of Canadian Pacific Kansas City Limited (NYSE:CP) set by analysts at Yahoo Finance stands at $86.55. Although it reflects a 6% increase, it’s not worth the long ride.

While we acknowledge the potential of CP to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than CP and that has 100x upside potential, check out our report about this cheapest AI stock.

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