Union Pacific: No Surprises During Investor Day; Healthy Core Pricing Should Persist

During Class I railroad Union Pacific's investor day, management highlighted key strategic initiatives, namely those linked to productivity improvement and volume growth via efficiency gains and strong network service performance, especially fluidity. Most, if not all, of Union Pacific's key service metrics—velocity, train length, and so on—have improved year over year thus far in 2024 under railroad veteran Jim Vena's leadership. The firm also discussed various investments targeting new business development, including its Falcon/Eagle Premium (north-south) intermodal offering and its Gulf Coast petrochemical franchise. We noted no major surprises in the presentation and do not expect to alter our discounted cash flow-derived $218 fair value estimate.