The time is right for investors to hop aboard struggling railroad stock Union Pacific , according to Barclays. Analyst Brandon Oglenski upgraded the stock to overweight from equal weight, saying in a note to clients Monday that the U.S. rail industry should rebound next year as supply chain issues are worked out. "With current volume pressure likely a function of constraints across the global supply chain (e.g. shortages of labor, equipment and inventory) rather than a signal of waning demand, we see fundamentals improving in 2022 as headwinds abate," the note said. "Of course reduced fiscal and monetary policy support in the US could negatively impact consumer consumption and thus rail demand, but relatively low inventory levels suggest some near-term support for transport fundamentals." The other main concern from supply chain issues — inflation — shouldn't be a problem for Union Pacific, Barclays said. "While current supply challenges are affecting volumes, we expect pricing to be a substantial tailwind for companies such as Union Pacific, which can pass on inflation pressures while delivering cost productivity," the note said. Shares of Union Pacific have slipped 3% year to date, badly lagging the broader market. Barclays hiked its price target on Union Pacific to $260 per share from $240. The new target is roughly 29% above where the stock closed Friday. -- CNBC's Michael Bloom contributed to this report. Correction: Barclays new price target on Union Pacific is roughly 29% above where the stock closed Friday. An earlier version misstated the percentage.
Union Pacific Corp. employee Jeff Smith wears a safety hat bearing the company's logo as he surveys rail cars at its facility at the Port of Oakland in Oakland, California, U.S., on Wednesday, Jan. 23, 2013.
Ken James | Bloomberg | Getty Images
The time is right for investors to hop aboard struggling railroad stock Union Pacific