UPDATE: Citigroup Downgrades Norfolk Southern to Neutral, Lowers PT

In a report published Wednesday, Citigroup downgraded its rating on Norfolk Southern Corp.

from Buy to Neutral, and lowered its price target from $78.00 to $68.00. Citigroup noted, “We are lowering our rating on Norfolk Southern to Neutral from Buy and reducing our price target to $68 from $78. While NS posted 3Q12 EPS which was slightly better than our lowered estimate and toward the upper end of its mid-September pre-announced range, we believe earnings headwinds are likely to persist into 1H13 due to sharp YoY declines in export coal volumes and the company's relative inability to manage short term costs in a weak volume environment. Following NS's pre-announcement, we maintained our Buy rating as the risk/reward scenario appeared to remain favorably balanced, but we are lowering our 2013 EPS estimate to $5.60, which drives the risk/reward scenario more balanced to $56 on the downside (10x 2013) and $73 on the upside (13x 2013), or -15% to +11%. Our $68 target is based on 12x 2013.” Norfolk Southern Corp. closed on Tuesday at $66.01.