UBS Downgrades Union Pacific (UNP) to Neutral

(Updated - April 18, 2016 7:50 AM EDT)

UBS downgraded Union Pacific (NYSE: UNP) from Buy to Neutral with a price target of $88. Analyst Thomas Wadewitz expects headwinds to continue, and he thinks lower volumes and unfavourable mix will translate into reductions in consensus EPS estimates.

"UNP's y/y volume trend deteriorated sharply in 1Q16 and we expect the mix issue they faced in 4Q to persist. While UNP has demonstrated an ability to take out cost, we expect the step down in base revenue to overwhelm the cost reduction leading to further cuts to EPS estimates. We do not anticipate significant near term downside, but we simply lack visibility to a catalyst for an improved revenue picture and EPS growth. We are reducing our EPS estimates, lowering our rating from Buy to Neutral, and removing UNP from the Key Call list," said Wadewitz.

For an analyst ratings summary and ratings history on Union Pacific click here. For more ratings news on Union Pacific click here.

Shares of Union Pacific closed at $81.21 yesterday.

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