(Bloomberg News circulated the following story by Eric Martin on May 19.)
NEW YORK — Union Pacific Corp. climbed to a record after Stifel Nicolaus & Co. analysts recommended buying the largest U.S. railroad as expanding profit margins boost the shares 20 percent annually for at least the next three years.
Stifel upgraded the shares to “buy” from “hold” and said the stock could climb to $182 in the next 12 months. Union Pacific, which employs about 100 people in Wichita, should also benefit from an increase in real prices and shipping volume, the analysts wrote.
“Significant additional opportunity exists for incremental productivity improvement,” analysts including John Larkin wrote in a research note dated today. “Capital spending will be wisely targeted to the company’s strongest franchise markets.”
The analysts increased their earnings per share estimates for the group to $8.35 in 2008 from a previous forecast of $8.15.
For 2009 the brokerage said Union Pacific will report EPS of $10.45 compared with a previous forecast of $9.65 and $13 in 2010, up from an $11 estimate.
Union Pacific gained $5.73, or 3.8 percent, to 158.73 in morning trading on the New York Stock Exchange.