02:04 PM EDT, 07/02/2025 (MT Newswires) -- UBS' second-quarter volume assumptions for both CN Rail and CPKC have increased on stronger than expected grain and intermodal. However, it anticipates weaker yield performance due to mix, less FX translation benefit, and elimination of carbon tax surcharges in Canada.

On a carload basis, UBS is trimming its second-quarter yield assumption from +4.3% y/y to +0.1% for CN and from +2.3% y/y to -0.3% for CPKC. At the same time, it is increasing EPS estimate for CN slightly from C$1.89 to C$1.91 (cons. C$1.90), but EPS estimate declines for CPKC from C$1.13 to C$1.11. The analyst is modelling several cost headwinds for CPKC including C$40 million from stock based comp and C$5 million from the recent network congestion.

UBS' second-quarter estimates for rails assume that intermodal volume increases 3%-4% on average from the second-quarter to third-quarter, followed by a fall off in the fourth-quarter from an early peak season. "There is visibility to container import volume improving in July/early August, but shipper intentions beyond August are unclear," UBS said.

Apart from the volume outlook, rail M&A will also likely be a topic of discussion on earnings calls.

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