Feb 27 (Reuters) - Shares of Union Pacific Corp surged nearly 10% before the bell on Monday, a day after the
U.S. railroad operator announced that its Chief Executive Lance
Fritz would step down this year amid pressure from investor
Soroban Capital Partners.
The gains came after some Wall Street analysts backed the
leadership change at the company, which has struggled with labor
shortages and service issues. Union Pacific's shares have
dropped more than 25% over the past 10 months.
Soroban, which owns an about $1.6 billion stake in Union
Pacific, urged the company on Sunday to consider its former
chief operating officer Jim Vena for the role — a choice that
was backed by brokerage BMO Capital Markets.
Vena, who serves as a board member at FedEx Corp ,
was previously considered as a candidate to lead Canadian
National Railway Co .
"We believe that Vena may be uniquely positioned to instill
a strong operating culture at UNP and position the company to
capitalize on the volume growth opportunities available
throughout its network," BMO's Fadi Chamoun said in a note.
Other analysts said a new leadership has the potential to
improve the company's operating ratio — a key profitability
metric.
The Omaha-Nebraska based company has faced severe criticism
over the past year from customers and the Surface Transportation
Board (STB) over rail service and shipping delays.
"Given the ongoing challenges at UNP, a change will likely
be viewed favorably," Wells Fargo Analyst Allison Poliniak-Cusic
said.
In its most-recent quarter, the company flagged higher
operating expenses caused by operational inefficiencies and the
current economic environment hitting its revenue growth.
(Reporting by Nathan Gomes in Bengaluru; editing by Uttaresh
Venkateshwaran)
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