12:53 PM EDT, 07/10/2024 (MT Newswires) -- UBS is raising its second quarter estimates for CP Rail to $1.02, which is 2% above consensus but trimming carload estimate for the railway company from -1.4% y/y to -3.4%. Revenue ton miles (RTMs) trended in line with UBS expectations at +6%.

"The wider spread between carloads and RTMs supports an increase in our revenue per car estimate from +9.4% y/y to +12.1%," UBS notes. Second quarter operating ratio estimate of 61.7% compares to consensus of 62.4%.

For CN Rail, UBS has cut its second quarter estimates from $2.04 to $1.92, ~2% below consensus of $1.95. Carload volume in the quarter for CN trended in line with UBS expectations of +4% y/y, but the brokerage is reducing its RTM growth estimate from +9.4% y/y to +7.1%. "CN experienced congestion on the busy Edmonton - Vancouver corridor in 2Q, which is reflected in their train speed and car velocity metrics, down 8% and 2% y/y, respectively." This will likely drive additional cost in the quarter. UBS is lifting its total operating expense estimate by ~$35 million vs. its prior model. Also, its new operating ratio assumption of 60.7% is 180 bp worse than its prior model and 10 bp worse y/y.

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