UNP remains a core idea despite a poor Q4
We continue to like UNP and believe its recent pullback provides a rare opportunity to purchase a proven double-digit EPS grower (ex-tax reform) for only ~17.5x forward earnings (~5% discount vs S&P500). While the company's Q4 result was unquestionably weak, we see no reason to believe recent service issues are systemic and would expect to see performance return as we move through FY18. We adjust estimates to factor in the benefits of US tax reform and raise our price target 17% to $160 (discussed within Section 1).Union Pacific, through its operating subsidiary, Union Pacific Railroad Company, is a Class I railroad operating in the United States. The company's network included route miles, linking Pacific Coast and Gulf Coast ports with the Midwest and eastern United States. gateways and providing several corridors to key Mexican gateways. The company serves the western two-thirds of the country and maintains coordinated schedules with other rail carriers for the handling of freight to and from the Atlantic Coast, the Pacific Coast, the Southeast, the Southwest, Canada, and Mexico. The company's business mix includes agricultural products, energy, industrial, and premium.
Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.
Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.
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