Analysts Hitch Their Train To Norfolk Southern, Upgrade Stock To Buy

Q3 Results

Reviewing the third-quarter results released on October 26, Argus said the company's earnings per share rose year-over-year and beat the consensus estimate. The declines in the railway operating revenues and volumes were not as worse in the second quarter.

Raising Estimates On Margin Improvement

Argus said it is raising its 2016 and 2017 earnings per share estimates for the company, premising the action on expectations of continued margin improvement and better volume trends. The firm's 2016 estimate stands at $5.58, up from $5.50, and the 2017 estimate is at $6.23, an increase from its previous expectations of $6.15.

Shares Offer Value Long Term

Noting that the company's shares have underperformed industry peers over multiple periods, Argus said the shares offer value for the long term. The company, with its high cost structure, could be a target for a potential industry suitor, which is seeking to grow its top line even while cutting costs, according to the firm.

As such, Argus upgraded shares of the company to Buy from Hold, while it has a $104 price target.

At last check, shares of Norfolk Southern are up 1.07 percent at $91.98.