Union Pacific's Turnaround Gains Momentum With Stellar Q2 Operations

Union Pacific Corp. (NYSE:UNP) is demonstrating a clear acceleration in its operational and financial performance, fueled by significant productivity gains and a strong earnings beat in its latest quarter.

This resurgence, coupled with strategic advancements and a dividend increase, signals a strong trajectory for the rail giant amid evolving market dynamics.

Bank of America Securities (BofA) analyst Ken Hoexter reiterated a Buy rating on Union Pacific Corp. and raised the price forecast to $271 from $262, citing growing confidence in the company’s operational and financial trajectory under CEO Jim Vena.

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Hoexter now applies a 20.5x multiple to 2026 EPS, above Union Pacific’s historical 14x–20x range, to reflect meaningful improvements in service, cost discipline, and the cultural transformation already underway.

He expects a strong earnings recovery in 2025, with EPS projected to rise from $11.06 in 2024 to $11.80 in 2025 and $13.20 in 2026. This outlook aligns with management’s long-term target of high-single to low-double-digit compound annual growth.

The second-quarter earnings beat, $3.03 adjusted EPS versus $2.92 consensus, and an industry-best adjusted operating ratio of 58.1% further strengthen his conviction in the turnaround story.

While acknowledging potential dilution risks from merger talks with Norfolk Southern (NYSE:NSC), Hoexter sees the proposed combination as strategically aligned with the Trump administration’s push to modernize U.S. infrastructure and create a more competitive transcontinental rail network.

He also expects Union Pacific to maintain healthy leverage between 2.7x and 3.0x, continue scaling its share repurchase program, and reaccelerate top-line growth.

Union Pacific outperformed in the second quarter, posting $6.15 billion in revenue, up 2% year over year, driven by 4% volume growth, strong core pricing, and record productivity.

Adjusted operating income rose 5% to $2.53 billion, while key efficiency metrics showed notable gains: freight car velocity improved 10%, locomotive productivity increased 5%, and workforce productivity jumped 9%.

The board approved a 3% increase in the quarterly dividend to $1.38 per share, payable Sept. 30. Management reaffirmed its full-year guidance, with earnings tracking toward the high end of its long-term growth outlook.

Beyond BofA, other analysts have also adjusted their positions on Union Pacific. Wells Fargo analyst Christian Wetherbee maintained an Overweight rating and raised his price target from $250 to $260. Conversely, Evercore ISI’s Jonathan Chappell maintained an In-Line rating but slightly trimmed his price target from $244 to $238. Notably, Jefferies analyst Stephanie Moore upgraded the stock from Hold to Buy, significantly lifting her price target from $250 to $285.

Price Action: UNP shares are trading higher by 2.27% at $224.64 at the last check on Friday.

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