Street Calls of the Week
Investing.com - BofA Securities lowered its price target on Union Pacific (NYSE:UNP) to $260 from $271 while maintaining a Buy rating on the railroad operator’s shares. The stock currently trades at $220.28, near its 52-week low of $204.66, suggesting potential upside according to InvestingPro’s Fair Value analysis.
The price target reduction reflects BofA’s adjustment to a 20.5x multiple on 2026 estimated earnings, down from the previous 21.0x multiple, though this valuation still remains above Union Pacific’s historical 14x-20x range.
BofA also reduced its fourth-quarter 2025 earnings estimate by 5% to $2.86 per share and its 2026 earnings estimate by 2% to $12.65 per share, citing near-term intermodal volume pressure and challenging comparisons expected in the first half of 2026.
Despite the target reduction, BofA reiterated its Buy recommendation based on improving operations and a projected double-digit three-year earnings per share compound annual growth rate.
The firm noted that its positive outlook is partially offset by current weak volumes and potential dilution concerns for the railroad company.
In other recent news, CSX Corp’s CEO Joe Hinrichs was dismissed following concerns from the board over his handling of a potential merger with Union Pacific and disputes over his compensation. The board felt that Hinrichs did not seriously engage with the merger approach initiated by Union Pacific CEO Jim Vena. Meanwhile, Union Pacific has been receiving attention from analysts, with BMO Capital reiterating an Outperform rating, citing strong operating margins and return on invested capital despite demand challenges. TD Cowen raised its price target for Union Pacific to $258, maintaining a Buy rating due to potential synergies from a unified operation with Norfolk Southern. Additionally, Bernstein SocGen Group reiterated an Outperform rating with a $294 price target, emphasizing the potential benefits of a proposed combination with Norfolk Southern. Union Pacific has also reached agreements with 11 unions, covering 46% of its craft employees, and secured interim deals with two major unions, providing a 3% pay increase effective from September 1. These developments highlight significant changes and analyst interest in both CSX and Union Pacific.
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