UPDATE: BMO Capital Markets Raises PT to $125 on Union Pacific, Maintains Outperform
BMO Capital Markets reiterates its Outperform rating on Union Pacific (NYSE: UNP) and raises its price target by $5 to $125 as easing cost inflation and robust pricing growth point to a strong 2012.
BMO Capital Markets says, "UNP reported strong Q4/11 EPS of $1.99 (+28% y/y), which was 8.7% ahead of BMO Research's estimate of $1.83 and 9.3% ahead of consensus of $1.82. We estimate that excluding higher-than-expected contribution from “Other Income,” EPS would have been $1.91, or approximately 5% ahead of consensus. Unit cost (excluding fuel) increased less than 1% y/y in Q4/11, which represents a significant improvement compared to prior quarters and explains the bulk of the variance relative to our forecast. ..Looking forward, the rate of growth in unit cost (excluding fuel) is expected to moderate in 2012 primarily as a result of lower inflationary pressure on labour and continued productivity improvement."
UNP closed at $112.18 yesterday.
