On Thursday, Citi analyst Ariel Rosa updated the price target for Union Pacific (NYSE:UNP) shares, raising it to $260 from the previous $254, while maintaining a Neutral rating on the stock. This adjustment followed Union Pacific's announcement of its fourth-quarter 2024 adjusted earnings per share (EPS) of $2.91, which included a $40 million expense related to crew agreement ratification. The reported EPS surpassed both Citi's and the Street's estimates of $2.79. According to InvestingPro data, the company, currently valued at over $150 billion, trades at a P/E ratio of 21.26x, suggesting a premium valuation relative to its near-term earnings growth potential.
Union Pacific's robust operating results contributed to a 5% rise in its stock price on Thursday, positioning it towards the higher end of its 52-week range. CEO Jim Vena and his team have been recognized for their strong execution, particularly in comparison to industry peers. The company has reiterated its goal to achieve the highest margins within the rail industry. InvestingPro analysis shows impressive gross profit margins of 55.4% and highlights the company's strong dividend history, having raised payouts for 18 consecutive years.
The company's operating ratio for the quarter stood at 58.7%, which is a significant improvement of 140 basis points over Citi's estimate of 60.1%. This improvement is attributed to Union Pacific's increased efficiency, as evidenced by a 5% year-over-year increase in volume, achieved with 3% fewer employees. Management has noted that some of the volume gains could be attributed to tariff pull-forward and the diversion of freight from East to West Coast.
Despite the high level of execution, Citi's stance remains Neutral. The firm cites several concerns, including Union Pacific's exposure to cross-border tariffs, potentially challenging year-over-year comparisons in 2025 that may lead to EPS growth at the lower end of the company's multi-year target range, and an elevated valuation compared to its industry peers. InvestingPro analysis supports this cautious stance, indicating the stock is trading above its Fair Value, with technical indicators suggesting overbought conditions. For deeper insights into Union Pacific's valuation and 12+ additional ProTips, explore the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Union Pacific Corporation has been the focus of several analyst updates following its impressive fourth-quarter earnings. TD Cowen, Stifel, Jefferies, BMO Capital, and BofA Securities all raised their stock price targets for Union Pacific, signaling their confidence in the company's performance. The earnings surpassed both TD Cowen's and BMO Capital's forecasts, with an operating ratio below 60, indicating improved efficiency and profitability. Union Pacific's gross profit margin stood at a robust 55.32%, reflecting its operational efficiency.
The raised price targets from these firms are based on Union Pacific's fourth-quarter performance and future prospects. For instance, BofA Securities anticipates Union Pacific will continue to see operational and financial improvements driven by strategic pricing and productivity gains. Additionally, BMO Capital expects the company to achieve high-single-digit to low-double-digit earnings per share growth for the fiscal year 2025.
Despite some uncertainty in the second half of 2025 due to challenging year-over-year comparisons in the international segment, Union Pacific is expected to continue benefiting from productivity improvements and modest pricing gains. These are recent developments that highlight the company's strong performance and future prospects.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.