Union Pacific stock pops on CEO Lance Fritz’s plans to step down

Yahoo Finance Live anchors Julie Hyman and Brad Smith discuss the rise in stock for Union Pacific, Lance Fritz stepping down, and Bank of America upgrading shares of the railroad company.

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[AUDIO LOGO]

JULIE HYMAN: Let's talk about some other movers that we're watching. Union Pacific CEO Lance Fritz plans to step down later this year, following pressure from a key shareholder. Those shares today are up by 11%. This is a really interesting unfolding situation here that we have been watching. Soroban Capital Partners is the company that owns a stake in this company that's about worth about $1.6 billion.

And according to the company, they've been engaging with this fund going back to 2017. What's also interesting is the company came out and said, we actually hired somebody last year to look at succession planning and figure out the next CEO. But we didn't know that until now when this hedge fund started kind of poking at them.

BRAD SMITH: Yeah, they've got about $10 billion in assets under management. And according to what they're looking to do here, as they were kind of laying out the specs that they're looking to change over, especially at the CEO level. And Lance Fritz, who we've had on Yahoo Finance time after time again.

He's been generous with his time in everything from some of the supply chain issues that Union Pacific was trying to move through and help a lot of its own partners and customers move through as well, to even some of the looting that was taking place in the rail lines in the West Coast last year, and really taking time to describe all of that to us. It's been a strenuous time over these past kind of 12 months here. And so Soroban wanting Jim Vena, who is-- and I think I have that pronunciation correct-- formerly Union Pacific's chief operating officer, wants them to become CEO of the firm now.

JULIE HYMAN: Yes. And Bank of America, by the way, out with a note today upgrading the price target to $241 a share, saying that this could potentially be a further catalyst for the stock to move higher. The analysts over there-- or Ken Hoexter also pointing out that the operating efficiency ratio, which is really the important metric by which most of the railroads are measured, that it's not been doing great in the last couple of years.

60% is sort of the dividing line here. And that's a line that Union Pacific had said it was aiming at to remain above for more sustainable period. Really, from prior to 2018, it was there. It was above 60% very consistently. And then had fallen below that and is just peaking back above it. So that's the number that, I imagine, Soroban and investors are gonna be watching, whoever ends up leading the company.

BRAD SMITH: Yeah, that's true. We'll be keeping an eye on the share price action here on the day. But still holding up quite frankly, to the upside as you were seeing there on the screen a moment ago.