Baird upgraded Union Pacific to Outperform from Neutral, citing merger synergies with Norfolk Southern. The brokerage raised its price target to $311 from $239 and set a $315 target for Norfolk Southern, betting on potential cost savings and network benefits from combining the two rail operators. Shares have lost 3% this week amid merger uncertainty.

Baird expects the regulatory timeline to shift toward mid-2027 after an incomplete Surface Transportation Board ruling and Union Pacific's planned April 30 application resubmission. The brokerage remains confident the merger will win approval despite expanded debate among lawmakers and industry groups. Republican lawmakers led by Dusty Johnson recently warned the deal could reduce competition and raise freight rates.

The brokerage sees a potentially favorable regulatory environment following the Justice Department antitrust chief's resignation. With two Surface Transportation Board vacancies, including the seat formerly held by Marty Oberman, Baird expects Richard Kloster's nomination could help the approval process once confirmed.