Dahlman Rose Sees 21% Upside In Union Pacific After Earnings (UNP)

Dahlman Rose & Co. has a $117 price target and a Buy rating on shares of Union Pacific UNP after it reported earnings yesterday. In a note to investors, Dahlman Rose writes, "We are lowering our earnings estimates due to fuel cost headwinds, the negative impact of the recent Japan events on auto volumes, and the need to ramp up operating resources. Our new 2011 and 2012 EPS estimates are $6.25 and $7.30 vs our prior estimates of $6.35 and $7.35. Our price target changes from $118 to $117, which is based on applying a 16x multiple to our new 2012 EPS estimate. We believe Union Pacific remains well positioned to benefit further from the ongoing freight recovery. Additionally, price outlook continues to improve as more legacy contracts should be re-negotiated in the back half of 2011. Accordingly, we maintain our Buy rating." Shares of UNP are up 31 cents to $96.38, a gain of 0.3% this morning.