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On Thursday, Benchmark analysts maintained their Buy rating and $265.00 price target for Norfolk Southern Corporation (NYSE:NSC) shares. Norfolk Southern reported its first-quarter adjusted earnings per share (EPS) at $2.69, slightly above the $2.66 market consensus and matching Benchmark’s prediction. According to InvestingPro data, the company is currently trading at a P/E ratio of 15.42x and appears undervalued based on its Fair Value analysis. This performance was achieved despite the company incurring $35 million in restoration costs from 18 storms throughout the quarter.
The company demonstrated resilience with year-over-year improvements in key service metrics, except for intermodal composite. With impressive gross profit margins of 49.52% and annual revenue of $12.11 billion, Norfolk Southern reaffirmed its full-year guidance, anticipating 3% year-over-year revenue growth and a 150 basis points improvement in operating ratio (OR). Management has acknowledged the current economic uncertainties and is planning for various outcomes. However, they have not observed any significant concerns from customers to date.
Norfolk Southern has been successful in gaining market share in certain segments and has surpassed its targets for same-store pricing. On the cost side, management is proactively controlling expenses and is confident in surpassing the goal of $150 million in year-over-year productivity gains, having already achieved $55 million in the first quarter.
Benchmark’s analysis suggests that Norfolk Southern is well-positioned to narrow the operating ratio gap with its industry peers over time, supporting their decision to reiterate the Buy rating and $265 price target.
In other recent news, Norfolk Southern Corporation reported mixed financial results for the first quarter of 2025. The company achieved total revenue of approximately $2.99 billion, which was flat compared to the previous year, while earnings per share (EPS) fell short of expectations at $2.69, missing the forecasted $2.81. Despite this, operational improvements such as a 43% reduction in train accident frequency and enhanced fuel efficiency were highlighted as positive developments. Analysts from BMO Capital Markets and Jefferies provided differing perspectives on the company’s outlook. BMO Capital Markets downgraded the stock target to $255, citing concerns over weakened demand and macroeconomic challenges, while maintaining a Market Perform rating. In contrast, Jefferies maintained a Buy rating with a $260 price target, expressing confidence in Norfolk Southern’s ability to achieve its 2025 financial targets, including a 3% revenue growth and a 150 basis points improvement in the operating ratio. Additionally, Norfolk Southern resumed share repurchases, buying back $250 million in shares, and continued to focus on productivity and cost-saving measures to navigate potential economic uncertainties.
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