Why Union Pacific Stock Chugged Almost 4% Higher on Thursday
Key Points
This was the latest in a series of hikes over the past few days.
The railroad freight company might be well poised to take advantage of an economic up cycle.
Storied railroad freight company Union Pacific (NYSE: UNP) had a fine Thursday on the stock market. Thanks in no small part to an analyst's price target increase, its shares thundered nearly 4% higher that trading session.
On the right track
That morning, Bernstein SocGen prognosticator David Vernon made that change. He now believes Union Pacific stock is worth $346 per share; his previous level was $330. More importantly, he maintained his positive view on the stock by maintaining his outperform (i.e., buy) recommendation.
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A single analyst move doesn't necessarily push a stock higher or lower. What compounded this one is that it followed two other bullish analyst takes, both coming on Wednesday.
The first was from Nathan Martin of Benchmark, who upped his price target to $325 per share from $300, and kept his buy recommendation intact. The second was the initiation of coverage by Citizens JMP, which began covering transportation sector titles. The firm's Jeff Kauffman flagged Union Pacific as an outperform, with a relatively high price target of $350.
Rolling with the recovery
According to reports, Kauffman wrote that what he considers to be the early phase of an economic recovery in the U.S. will be a major catalyst for improvements in earnings for the transportation sector generally and Union Pacific specifically in the coming quarters.
While I don't believe we're in a serious slump, I'd agree that our economy is positioned for some improvement. So I'd buy this argument, which certainly supports the buy case for Union Pacific's equity.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Union Pacific. The Motley Fool has a disclosure policy.