Citi upgrades Union Pacific as railroad stock looks ‘too compelling to ignore’
Citi believes Union Pacific looks “too compelling to ignore.” Analyst Ariel Rosa upgraded the railroad to buy from neutral. He also raised his price target to to $251 from $250. Rosa’s revised forecast is approximately 17% above where Union Pacific closed on Friday. Rosa pointed to more clarity on Union Pacific’s planned merger with fellow railroad company Norfolk Southern . While he thinks Union Pacific will face a “contentious” merger review process ahead, the likelihood of a clean merger approval with limited constraints has slightly increased and now remains in the 65%-70% range. “In July we had moved to Neutral based on our view that myriad uncertainties related to its proposed merger with Norfolk Southern could push investors to the sidelines, with UNP facing a period of ‘deal purgatory,'” Rosa wrote. “We now upgrade given (1) recent events which have outlined the grounds on which UP-NS will face regulators; (2) the recent drop in its share price which has pushed upside on UNP into our Buy-range; and (3) strong operating execution from UNP which bodes well for both 3Q25 earnings and the likelihood of integration success assuming deal approval.” More importantly, Rosa wrote that even if the merger falls through, Union Pacific stock still looks attractive on its own. Shares trade at around 18 times forward earnings, well below the S & P 500’s 24.7 multiple. “The good news for UNP investors is that the attractiveness of UNP shares does not hinge on deal approval, as UNP trades at a discount to its long-term average PE on a stand-alone basis, even as it executes at a high level,” the analyst added. UNP YTD mountain UNP year to date The stock has slipped 6% in 2025. Shares ticked more than 1% higher in the premarket Monday following Citi’s upgrade. ( Learn the best 2026 strategies from inside the NYSE with Josh Brown and others at CNBC PRO Live. Tickets and info here . )
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