Investors Waiting For A Good Entry Point In Norfolk Southern

Weak Industry Trends In Rails, Coal

"Business trends have turned negative for the rail industry, and as a high-cost operator, NSC has little ability to make a quick fix," Eade said.

Norfolk has relatively high exposure to the coal sector as well. Coal's outlook, according to Argus, "remains bleak given the low price of natural gas."

In addition to weak industry trends, Norfolk Southern has "underperformed industry peers over multiple periods, and in our view offer value for the long term."

High Cost Structure Needs Work

The analyst noted how the company's high cost structure could be attractive to a buyer looking to grow the top line while cutting costs. Norfolk management, however, still has "more wood to chop" in order to improve the company's high cost structure, said Eade.

"We would look to upgrade the shares in the event of a non fundamental pullback to the mid-$70s."

According to TipRanks, John Eade is among the best analyst's covering railways, with a 70 percent success rate and a 10.3 percent average return per recommendation. The analyst is ranked 147 out of 4071 analysts.

At time of writing, Norfolk Southern traded at $88.09, up 1.06 percent on the day.

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