UPDATE 1-Barclays upgrades Canadian Pacific Railway
* Raises CP to "overweight" from "equal weight"
* Proxy battle to bring renewed focus on operational discipline
* Earnings could double in 4-5 years
* Raises share-price targets on CP and rival Canadian National Railway
May 17 (Reuters) - Canadian Pacific Railway Ltd has the potential to nearly double its earnings as a grueling battle between the company and its largest shareholder brings in more operational discipline, Barclays Capital said, upgrading the stock to "overweight."
Canadian Pacific Railway, Canada's second-biggest railroad operator, is fighting for shareholder support against its biggest shareholder Pershing Square Capital Management, which wants to replace CEO Fred Green with Hunter Harrison, former head of Canadian National Railway.
CP's performance has long lagged that of competitors, and Pershing sees new leadership as the only way to fix the problem.
The CP proxy saga will come to a "likely conclusion" at Thursday's annual shareholder meeting, Barclays said.
"A shift in management direction and accountability will leave a lasting impression ... we expect a revitalized operational focus from the ground up will drive meaningful improvement over the near-term," analyst Brandon Oglenski said in a note to clients.
Oglenski raised his price target on CP shares to C$92 from C$80, saying he sees significant value in the stock due to the higher earnings potential. CP shares closed at C$75.86 on Wednesday on the Toronto Stock Exchange.
Oglenski is rated four stars by Thomson Reuters StarMine for the accuracy of his earnings estimates.
He also raised his price targets on Canadian National Railway to C$88 from C$84, on CSX Corp to $27 from $26, on Norfolk Southern Corp to $78 from $75 and on Union Pacific Corp to $138 from $132.
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