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Canadian National Railway Co. was a favoured name on the Street this past year in the transportation sector, and investors who stuck with the stock largely did well. Since dipping to below $65 in early fall, it has since rebounded with vigour, trading just below 52-week highs near $80.

RBC Dominion Securities Inc. analyst Walter Spracklin thinks the recent rally now leaves only limited upside for the stock. Furthermore, he believes investors are going to be less defensive in their investing approach over the coming year, and that may mean less interest in CN, which tends to benefit from flight-to-quality money flows during volatile markets.

He downgraded the stock today to "sector perform" from "outperform," though he also raised his price target by $4 to $85.

"CNR's strong relative outperformance last year (as the best-performing major Class 1 railroad stock in 2011) means that it now trades at a meaningful premium to the group, at 14.7 (times earnings) vs. the group average of 12.9 (times)," Mr. Spracklin said in a research note.

"We continue to recommend CNR as a long-term core holding; however, based on relative return to our target, we believe this is more representative of a sector perform rating." His fourth-quarter 2011 earnings per share estimate remains at $1.24.

Analysts have generally been less bullish on Canadian Pacific Railway Ltd. , as the CN rival struggled with various shutdowns of its network on the Prairies and U.S. Midwest amid adverse weather conditions.

But Mr. Spracklin now sees greater reason to buy the stock than CN, reiterating his "outperform" rating. "We continue to see significant potential for earnings upside in CP based on the company's progress in increasing operational efficiencies," he commented.

Nevertheless, he cut his price target on CP by $8 to $72 because he no longer sees much chance of the company being vulnerable to a takeover. Speculation had swirled that the railway may face pressure to be sold after William Ackman's Pershing Square Capital Management took a 12.2 per cent stake in the company this fall.

Mr. Spracklin today also upgraded Union Pacific Corp. to "outperform" and raised his price target to $128 (U.S.) from $110; he downgraded Norfolk Southern Corp. to "sector perform" with a price target of $93.

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Manitok Energy Inc. has "undergone a step change" in the second half of 2011, with its Stolberg discovery well coming on stream, a large acquisition in the Foothills and the completion of an equity financing, said Raymond James Ltd. analyst Luc Mageau. "The company now has a significant production base, robust balance sheet and large slate of high-impact growth opportunities," he commented.

Upside: Mr. Mageau reiterated an "outperform" rating, but trimmed his price target by 25 cents to $2.50.

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Orbit Garant Drilling Inc.'s focus on Canada means stability, but also less explosive growth prospects than peers with greater international exposure, said CIBC World Markets Inc. analyst Cosmos Chiu. He thinks that earnings growth at Orbit, which does more than 80 per cent of its business in Canada, will not be as robust as other drillers.

Upside: Mr. Chiu downgraded the stock to "sector perform" from "sector outperform" but maintained a $7 price target.

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Wajax Corp. has appointed Mark Foote, a fixture of the Canadian retailing scene, as its new president and CEO to replace the retiring Neil Manning. Mr. Foote has been CEO of Zellers since 2008 and is currently in the midst of liquidating most of the retailer's stores. "Although heavy equipment is a new industry for Mr. Foote, we believe that his process-oriented style should enable him to transition into his new role effectively," commented Desjardins Securities Inc. analyst Benoit Poirier.

Upside: Mr. Poirier reaffirmed his "buy" rating and $51 price target.

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Wireless Matrix Corp. reported weaker-than-expected fiscal second-quarter results due to weak hardware revenue, noted Versant Partners analyst Justin Kew. The company is seeing pressure from the company's transition from high priced satellite hardware to cell-based products, and from a higher number of customers leasing hardware, he said.

Downside: Mr. Kew cut his price target by 10 cents to 75 cents and affirmed a "neutral" recommendation.

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