CSX has a $62.5 billion market capitalization, compared to $58.7 billion for Norfolk Southern. Union Pacific is the largest of the three S&P 500 railroad stocks, with a $138.1 billion market cap. BofA also cited CSX's internal improvements in the upgrade, according to The Fly investment site.

Railroad operator Union Pacific is holding talks to acquire its smaller rival Norfolk Southern in what would be a megamerger in the railroad industry, according to people familiar with the matter. The talks are early-stage and there are no guarantees they will result in any deal or receive regulatory signoff,