(The following story by Tom Reese and Paul Rubillo appeared at Forbes.com on March 16, 2009.)
NEW YORK — Shares of Union Pacific are up 5% after an analyst at Merrill Lynch raised the railroad company from a “neutral” rating to “buy.”
The analyst believes volumes have begun to find a floor as we move into spring planting season, auto and some chemical plants come back on line, and retail sales were slightly better than expected.
The company should see a benefit to the big drop in fuel costs that we have seen going into this year. The big question mark is whether demand will pick up.
We had removed UNP from our “recommended” list back on Aug. 12, when shares were trading at $79.25. The company currently has a 2.9% dividend yield, based on Friday’s closing stock price of $37.18. The stock has technical support in the $37 to $41 price area. If the shares can firm up, the $49 to $50 area would act as the first level of overhead resistance. We would remain on the sidelines for now.
Union Pacific is not recommended at this time, holding a Dividend.com rating of 3.2 out of five stars.