The rails sector is on high alert following reports that Union Pacific ( UNP) is focused on acquiring Norfolk Southern ( NYSE: NSC ), which could create the nation's first coast-to-coast rails network if the deal cleared regulatory and White House scrutiny.

Union Pacific, the largest U.S. freight railroad operator, is exploring a possible acquisition of Norfolk Southern to create a $200 billion coast-to-coast rail network, a person familiar with the matter said.

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.