TD Securities Downgrades Union Pacific to "Hold" (UNP)

TD Securities Downgrades Union Pacific to “Hold” (UNP)


TD Securities reported on Monday that it has downgraded transportation company operator, Union Pacific Corporation (UNP).

The firm has lowered its rating on UNP from a “Buy” to a “Hold,” and has given the company a $161 price target. This price target suggests a 8% increase from the stock’s current price of $147.52.

An analyst from the firm commented, “we continue to believe that Union Pacific boasts an outstanding franchise, which provides exclusive access to a number of markets. We have also been impressed with the company’s effective management of the operational challenges resulting from very strong growth in its southern region, which, due to the prevalence of single track and concentration of manifest traffic, tends to be the most train-length-constrained part of Union Pacific’s network. That being said, the stock is up 8% since the company reported its Q1/13 results, and is trading at 14.9x our FTM EPS estimate (12 months ending March 31, 2014), which we view as fair-to-full relative to the group’s historical P/FTM EPS range of 12.4x-15.6x (average of ~14.0x).”

Union Pacific shares were mostly flat during premarket trading Monday. The stock has increased 30% in the past year.

The Bottom Line
Shares of Union Pacific Corporation (UNP) have a 1.87% yield, based on Friday’s closing price of $147.52.

Union Pacific Corporation (UNP) is not recommended at this time, holding a DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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