CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
We lift our 12-month price target by $5 to $186 using a forward P/E of 16.5x our 2025 EPS estimate, below the five-year average of 19.6x due to the ongoing Vancouver rail strike (weak West Coast) and the UAW strike. We lower our 2023 EPS view by $0.19 to $9.88, cut 2024’s by $0.25 to $10.55, and set 2025’s as $11.27. Q3 sales fell 10% Y/Y on lower volumes (-3%) and lower fuel surcharges (-8%), partially offset by price/mix (+1.5%). Lower volumes were driven by weak West Coast imports (lower Intermodal) and tight grain supplies. Op. income fell 17% Y/Y on lower volumes and fuel surcharges, despite fuel prices rising in Q3, due to UNP’s lag on its fuel surcharge program. UNP posted Q3 EPS of $2.51, beating consensus by $0.07. We think auto may be impacted due to the UAW strike, negatively affecting UNP’s operations as auto was supposed to be a bright spot in a time of lower volumes amid a high interest rate environment. We also note UNP decreased shares outstanding by 2% in Q3 despite lower revenue and margins.