Canadian Pacific Shares Fall After Downgrade

NEW YORK (AP) — Shares of Canadian Pacific Railway Ltd. fell Friday after a Stifel Nicolaus analyst John Larkin on Friday cut his rating to "Sell," saying the stock has gotten too expensive to justify a "Hold" rating.

Larkin also noted that the near future will be challenging for railroads, suggesting that recent upticks in traffic from Cash for Clunkers and general inventory replenishment likely won't last much longer.

As retailers continue to carefully manage inventory amid weak sales, the company's intermodal segment will be hurt, Larkin said. Intermodal involves train cars that are switched to trucks for final delivery.

He also thinks Canadian Pacific will suffer from more volatility in shipping volumes because of its high concentration of commodity volumes, including coal and potash.

Larkin added: "We believe that Canadian Pacific is among the Class I rails most likely to experience quarterly earnings misses over the next few years."

Shares fell $1.10, or 2.2 percent, to $48.96 in afternoon trading.