UPDATE: Seaport Global Securities Starts Union Pacific (UNP) at Buy
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(Updated - October 24, 2016 9:27 AM EDT)
Seaport Global Securities initiated coverage on Union Pacific (NYSE: UNP) with a Buy rating and a price target of $100. Analyst Mark A. Levin thinks a recent correction creates an opportunity.
"We think that concerns about the company's Q3 core pricing growth (the weakest in several years) create an opportunity to buy arguably the best and most diversified rail franchise in North America. In our view, pricing is a lagging, not leading, indicator, and will improve as volumes accelerate. The current freight environment, while exceedingly challenging from both a volume and price perspective, is poised to improve in the coming quarters, aided by very easy comparisons and what eventually will become tighter capacity. When coupled with the significant productivity improvements the company has made the last several years, we are big believers in UNP's operating leverage. Moreover, we think western coal burn will be up at least 5% (and perhaps 10%) in 2017, far above what many believe is possible," said Levin.
Shares of Union Pacific closed at $90.37 yesterday.
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