UPDATE: Stifel Downgrades Norfolk Southern
In a report published Thursday, Stifel analyst John Larkin downgrades Norfolk Southern (NYSE: NSC) to Hold from Buy.
According to the report, NSC's shares rebound nearly fully from the 2012 coal scare.
“The analysts admire NSC's long-term view toward value creation,” the report noted. “However, we believe most of the upside potential available in the company's common shares has been realized, as they have nearly fully recovered from their lows experienced in 2012 as investors fretted over the decline in the eastern railroad's utility coal business (natural gas for coal substitution was the main culprit here) and reduced pricing dynamics in the eastern U.S. export coal business (weaker global economic growth the main driver in this case).”
The report further asserted that the combination of inflation plus pricing, GDP+ volume growth, a partial offset of railroad inflation through productivity and efficiency enhancements and a steady share repurchase program will drive the 10 percent EPS growth embedded in estimates.
NSC closed Wednesday at $91.16.
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