Bank of America says it’s time to buy Union Pacific after the company announced its current CEO, Lance Fritz, would be stepping down this year. Analyst Ken Hoexter upgraded the railroad operator’s shares to buy from neutral. Hoexter said the leadership change shows the company is prioritizing an operational fix after it was flagged for poor service by the Surface Transportation Board last year. “This in our view highlights the service and operational underperformance UNP has experienced over the past few years, one of the driving points in our downgrade last month,” Hoexter wrote Monday. “It also follows UNP being called to the Surface Transportation Board (STB) in December to detail its use of embargoes and poor service, the first time a single rail had been called in since CSX in 2016.” The firm expressed optimism for the frontrunner for Fritz’s replacement — former Union Pacific COO Jim Vena — citing his strong track record at the company. However, BofA noted that besides Vena, the “list of experienced replacements is short.” Hoexter raised his price target to $241 from $218, implying a 25% upside from Friday’s closing price. Shares were up 10% during premarket trading on Monday following the leadership change announcement. UNP 1D mountain UNP pops —CNBC’s Michael Bloom contributed to this report.
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