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Investing.com - Bernstein maintained its Outperform rating and $267.00 price target on Union Pacific (NYSE:UNP) Thursday, despite the railroad’s first-quarter results falling slightly below expectations. According to InvestingPro data, the company maintains impressive gross profit margins of 55.7% and has consistently paid dividends for 55 consecutive years, demonstrating its financial stability.
Union Pacific reported first-quarter 2025 revenue and earnings per share approximately 1% below consensus estimates, with the miss primarily attributed to weaker-than-expected fuel surcharge revenue and underperformance in the "Other revenue" category. Despite these shortfalls, the company affirmed its full-year 2025 outlook. Based on InvestingPro’s Fair Value analysis, Union Pacific appears fairly valued at current levels, with analysts projecting EPS of $11.49 for fiscal year 2025.
The railroad’s freight revenue per unit was in line with Bernstein’s estimate but about 1% below street expectations. When excluding fuel surcharge impacts, revenue per unit actually exceeded Bernstein’s projection by 2%, with Union Pacific describing its underlying pricing as the strongest it has been in a decade.
Volume performance was mixed across segments, with Premium traffic showing strength in carload numbers but weaker revenue per unit performance. This segment experienced negative mix effects from high growth in lower-revenue international intermodal shipments alongside declines in higher-revenue auto parts traffic.
Bernstein remains constructive on Union Pacific, noting that the first-quarter miss appears more related to fuel factors than recurring issues. The firm expects Union Pacific to be "best prepared to reap the benefits of a turn in the truck market" and highlighted the railroad’s industry-leading margins resulting from consistent operational improvements.
In other recent news, Union Pacific Corporation’s first-quarter earnings for 2025 revealed a lower-than-expected adjusted earnings per share (EPS), despite a notable 18.9% year-over-year increase in intermodal volumes. The company’s operational expenditure initiatives have resulted in a 6.3% reduction in OpEx per carload, indicating strides in efficiency. Goldman Sachs downgraded Union Pacific’s stock rating from Buy to Neutral, citing potential economic challenges, including tariffs and increased costs, which could affect growth and operations. Meanwhile, Loop Capital adjusted its price target for Union Pacific to $202, maintaining a Sell rating due to concerns over tariff impacts on rail volumes. Stephens also revised its price target to $255, keeping an Overweight rating, acknowledging the company’s pricing power and potential for efficiency improvements. Additionally, Union Pacific’s shareholders voted on key proposals during the Annual Meeting, approving the election of directors and executive compensation, while rejecting a proposed clawback policy amendment. These developments highlight the company’s ongoing efforts to navigate economic and operational challenges while maintaining investor confidence.
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