Street View: Brokerages positive on Union Pacific's growth story

Union Pacific's UNP.N second-quarter profit beat Wall Street estimates on Thursday, as higher freight rates and strong demand overshadowed an increase in operating costs.

Focus on merger approval

• Evercore ISI ("outperform," PT: $322) says on the proposed merger with Norfolk Southern, "UNP's show of compromise and CNI's implicit backing improves the odds of merger acceptance from the regulator, which should be a benefit to both UNP and NSC shares"
• Morningstar (fair value: $250) says co's business remains healthy, with strong truck-to-rail conversions and improving industrial demand, barring tariff or oil shocks going forward
• TD Cowen ("buy," PT: $325) expects strong growth in H2 especially in domestic intermodal, as more freight shifts from trucks to rail due to tight trucking capacity and higher fuel costs
• Citigroup ("buy," PT: $349) says, "while we see the UP-CN agreement as an important step, we think it only modestly increases the likelihood of merger approval, as BNSF/CP and many shippers are likely to remain steadfastly opposed"