UBS Upgrades Union Pacific Stock Amid Transcontinental Merger Bid

UBS upgraded the stock rating of Union Pacific from neutral to buy and increased its price target from $310 to $339. The investment bank forecasts strong volume growth for the freight carrier in 2027, specifically predicting a 3.5% year-over-year increase in intermodal freight volume.

UBS analyst Thomas Wadewitz stated that pricing for merchandise and intermodal freight relative to the truckload market provides a favorable tailwind for the company. Union Pacific shares have risen 23% in 2026 and saw additional gains in premarket trading following the upgrade.

The upgrade comes as Union Pacific pursues a multi-billion-dollar merger with Norfolk Southern Corporation to create the first transcontinental railroad in the United States. While UBS views a potential approval as a source of optionality for the stock, the bank acknowledges that the regulatory review process will be challenging with an uncertain outcome.