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Investing.com - TD Cowen has raised its price target on Union Pacific (NYSE:UNP) to $258.00 from $252.00 while maintaining a Buy rating on the railroad operator’s stock. The company, currently trading at $216 with a market capitalization of $128.1 billion, has maintained impressive gross profit margins of 56% and has raised its dividend for 18 consecutive years, according to InvestingPro data.
The price target increase comes as TD Cowen analyzes potential synergies from a unified Union Pacific and Norfolk Southern (NSC) operation, which the firm believes could exceed previously disclosed targets.
TD Cowen’s analysis examined over 4,000 origin-destination pairs in watershed areas, concluding that even approximately 10% truck conversion would surpass Union Pacific’s net synergy target that was recently disclosed in an S-4 filing.
The firm has introduced a Union Pacific merger model as part of its analysis, using a 2029 EV/EBITDA valuation methodology to arrive at the new $258 price target.
Union Pacific remains rated as a Buy at TD Cowen, with the firm expressing confidence in the potential upside from the proposed combination with Norfolk Southern.
In other recent news, Union Pacific has reached agreements with 11 unions, covering 12 crafts and representing 46% of the railroad’s craft employees. Additionally, the company secured interim deals with the International Association of Sheet Metal, Air, Rail and Transportation Workers and the Brotherhood of Locomotive Engineers and Trainmen, which include a 3% pay increase effective September 1. Union Pacific has also expanded its network by adding 15 new Focus Sites across eight states, enhancing business access to its extensive rail network. In terms of analyst actions, Bernstein has reiterated its Outperform rating on Union Pacific with a price target of $294, citing potential benefits from a proposed combination with Norfolk Southern. Conversely, Argus has downgraded Union Pacific from Buy to Hold, noting the company’s already strong position in the rail industry. Meanwhile, in a broader regulatory context, the White House has removed Surface Transportation Board member Robert Primus, a move linked to alignment with President Trump’s agenda. These developments come as Union Pacific continues to adjust its operations and strategies in the current market environment.
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