09/30/2014 07:11 EDT | Updated 11/30/2014 05:59 EST

Canadian Pacific raises share buyback ceiling after hitting maximum threshold

CALGARY - Canadian Pacific Railway Ltd. (TSX:CP) has received approval to more than double the amount of stock it can purchase under its 2014-15 share buyback program, having reached the maximum available under the initial plan.

The Calgary-based company will now be able to repurchase and cancel up to 12.65 million common shares by mid-March 2015 — an increase of 140 per cent from the previous limit.

Citi Research estimated the additional 7.4 million shares would cost C$1.7 billion at its current price, although this type of plan doesn't commit the railway to make any purchases and the price it pays will depend on market conditions.

Citi raised its price target for CP shares to US$235 (C$262) from US$205 (C$229) and reiterated its "buy" rating.

Since March 17, 2014, Canadian Pacific has repurchased about 5.27 million common shares through the Toronto and New York stock exchanges.

CP didn't disclose the average price paid in its announcement late Monday.

Its shares opened Tuesday at C$230.46 in Toronto, up from $228.58 at the previous close and up from $169.99 on March 14. In New York, the shares opened at US$206.70, up $1.65 from the Monday close.