BofA Global Research upgraded UNP to "buy" from "neutral" in response
Union Pacific Corporation (NYSE:UNP) said it will name a successor for CEO Lance Fritz still in 2023, after hedge fund Soroban Capital Partners pressured the company for a replacement. The security is up 9.1% at $211.61 at last check, enjoying an upgrade from BofA Global Research to "buy" from "neutral," and a price-target hike to $241 from $218.
The shares are bouncing off the $190 level, which previously supported UNP in November. Today's bull gap has the equity trading back above the 40-day moving average, though it's yet to overcome resistance at the $215 area. Year-over-year, Union Pacific stock is still down 14.2%.
Short-term options traders are overwhelmingly bearish, per UNP's Schaeffer's put/call open interest ratio (SOIR) of 1.55, which stands in the elevated 99th annual percentile, meaning these traders have rarely been more put-biased. Should this pessimism begin to unwind, the shares could surge even higher.
Drilling down to today's options activity, 3,209 calls and 3,668 puts have already crossed the tape, which is 10 times the volume that is typically seen at this point. Most popular by far is the March 175 put, where new positions are currently being opened.
Those looking to weigh in on the stock's next moves should consider options, since UNP's Schaeffer's Volatility Index (SVI) of 23% sits in the relatively low 16th percentile of the past 12 months.