Union Pacific's (UNP) EPS growth and stock price appreciation in 2027 could be driven by multiple drivers, including volume growth, more solid pricing, and potential favorable regulatory updates related to its merger with Norfolk Southern (NSC), UBS said in a Wednesday research report.

The brokerage said it expects 2026 and 2027 EPS of $13.41 and $14.90, respectively, adding that the combination of EPS delivery and optionality on a potential merger with Norfolk Southern will support upside for the company over the next 12 months.

The regulatory process related to the potential business combination is likely to be challenging, but the company could realize EPS of $19.40 to $21.90 in 2030 if a merger closes, analysts wrote.

In the industrial segment, low inventories could indicate further growth in steel volumes, while higher energy prices are likely to continue driving growth in the company's petroleum and products business, according to the note.

The brokerage said it upgraded the stock to buy from neutral and boosted its price target to $339 per share from $310 earlier.

Price: 285.46, Change: +1.47, Percent Change: +0.52