Union Pacific Gets Mixed Reactions From Analysts After Q2 Results

Analysts reacted to Union Pacific Corp UNP Q2 results.
RBC Capital analyst Walter Spracklin lowered UNP's price target to $230 from $233 while maintaining the Sector Perform rating for the shares.
The analyst stated that 2Q22 was disappointing, as network fluidity issues that led to a >500bp deterioration in O/R y/y was skated onside by higher pricing and a positive mix.
Management's revised guide is still predicated on an operational turn-around at Union Pacific, noted the analyst.
Spracklin believes it will have a risk discount associated with it, reflected by a downward valuation rating to the shares.
Related: Union Pacific's Q2 Highlights: Earnings Beat, Limited Carloadings, Cost Pressure & More
Credit Suisse analyst Ariel Rosa lowered the price target to $252 from $255 while maintaining the Outperform rating on the shares.
The analyst stated that the revenue beats on strong pricing gains, but costs increase even faster; CEO Lance Fritz described 2Q as challenging, as UNP limited volume and took on additional expenses to improve network fluidity.
Key risks to UNP center on high costs and an inability to improve network fluidity, though the analyst thinks these challenges abate in 2H on increased hiring, noted the analyst.
Rosa believes UNP can hold some of its recent pricing gains and drive volume growth. This should be achievable as network fluidity improves and demand continues to outstrip UNP's ability to serve.
UBS analyst Thomas Wadewitz lowered UNP's price target to $236 (an upside of 10.8%) from $267 while maintaining the Neutral rating on the shares.
The analyst stated that the company delivered improved car velocity and highlighted the expected graduation of 400 additional conductor trainees as a driver of further progress in network velocity in Q3.
Susquehanna analyst Bascome Majors raised UNP's price target to $240 (an upside of 12.7%) from $235 while maintaining the Neutral rating on the shares.
Majors noted management was optimistic about a second-half improvement in both fluidity and volumes and opportunities into 2023.
Deutsche Bank analyst Amit Mehrotra reduced UNP's price target to $232 (an upside of 9%) from $260 while maintaining the Buy rating on the shares.
Price Action: UNP shares are trading higher by 0.47% at $212.86 on the last check Friday.

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