Stifel Upgraded Union Pacific, Noting Recent Sell Off Is Overdone

In a report published Thursday, Stifel analyst John Larkin upgraded shares of

to Buy from Hold with an unchanged $120 price target given a more attractive risk-adjusted upside potential in shares for the first time in a while. Larkin continued shares of Union Pacific may have reacted to

profit warning in late March that started sell-off for railroad companies. However, the analyst noted that corrections in Kansas City's guidance are "not uncommon." Following the industry-wide sell-off, the analyst stated that shares of Union Pacific are close to fairly valued on an absolute basis and undervalued on a relative basis to the broader S&P 500 index. As of Thursday, shares of have been trading at a P/E of 14.78, just above the middle of its historical trading range. However, this reflects a 6.9 percent discount to the broader S&P 500 which sits towards the bottom of its ten-year relative trading range. In addition, shares are trading at a discount on an absolute and relative basis, in relation to its historical trading ranges when compared to the broader railroad segment.