Sector Snap: Analyst Cuts 2 Rails To 'Sell'

The analyst also downgraded the Canadian National Railway Co. to "Hold," saying the stock has gotten too expensive to justify its previous rating of "Buy." Canadian National shares have leaped 39 percent since early March.

"We want best-of-breed Canadian National in the portfolio, we're just recommending patience with new money here," Troy wrote in a note to clients.

In general, Troy said that he's cautious on the sector's potential for growth as the possibility of an "L'' shaped, or slow and extended, economic recovery grows. Also, growing concerns that additional regulatory restrictions will be placed on the group might slow earnings upticks, as the rails might not be able to raise prices as fast or as high as they have in the past.

In morning trading, shares of Canadian National fell 78 cents to $39.99. Canadian Pacific lost 44 cents to $34.76. Burlington Northern fell $1.72, or 2.6 percent, to $65.42.