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In a research note out Monday, analyst Jason H. Seidl of Cowen & Company upgraded shares of Union Pacific Corporation (NYSE: UNP ) to Outperform from Market Perform and lowering the price target from $117 to $111, feeling that further stock price downside is limited. Seidl states that with UNP shares down nearly 19 percent year-to-date and 15 percent since March, and with expectations about to be largely reset to reflect traffic weakness, long-term investors should view this as a unique opportunity to own a high-quality rail. The analyst points out that the shares are now trading at 14x 2016 consensus EPS, a 15 percent discount to the historical multiple. He goes on to say that even if traffic remains at current levels, the railroads should be able to push through compensatory rate increases as they did during the great recession.Investors eyes will likely turn to 2016 when easier traffic comparisons, improving service measures and continued share repurchases should aid earnings growth for UNP and the rest of the rail sector. Seidl further states, UNP is one of the best managed North American Class I railroads and the only western one that is publicly traded. While traffic continues to decline, further weakness is limited from this point, in our opinion, as most natural gas switching has already occurred, and y/y comparisons become less difficult in 2H15. We rate UNP Outperform. Shares closed lower by 0.43 percent at $96.24, implying 15.33 percent upside to the new price target. Latest Ratings for UNP Jul 2015 Cowen & Company Upgrades Outperform Jul 2015 Citigroup Maintains Buy Jun 2015 Susquehanna Maintains Positive View More Analyst Ratings for UNP View the Latest Analyst Ratings See more from Benzinga Deutsche Bank Cautions Apple iPhone Growth Will Underperform Market In 2016 What To Expect From Thursdays Jobs Number Unusual Covered Call Opportunity In Kate Spade © 2015 Benzinga.com. Benzinga does not provide investment advice. All rights reserved. View comments
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