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BMO Capital Markets has maintained its Market Perform rating on Norfolk Southern Corporation (NYSE:NSC) with a steady price target of $270.00. The assessment followed Norfolk Southern’s fourth-quarter results for the year 2024 and the full-year guidance for 2025, which were described as aligned with market expectations.
Analysts at BMO Capital highlighted Norfolk Southern’s confirmation of its operational ratio (OR) improvement targets despite facing a variety of challenges. These include a subdued demand environment and specific headwinds such as those from the coal sector and, to a lesser extent, fuel costs. The firm noted that these factors underscore the company’s enhanced operational execution. With impressive gross profit margins of 48.4% and a 43-year track record of consistent dividend payments, the company has demonstrated resilience through various market cycles.
The report further commented on Norfolk Southern’s positioning, stating that the company seems well-prepared to capitalize on a potential upswing in demand and a more favorable truckload (TL) cycle. BMO Capital’s projections and the price target for Norfolk Southern remain unchanged based on the current analysis.
In conclusion, BMO Capital’s stance on Norfolk Southern is that the stock would be considered for a more positive rating if the valuation were to become more attractive, assuming all other factors remain constant. The firm’s current outlook suggests a neutral perspective on the stock’s near-term performance.
In other recent news, Norfolk Southern Corporation reported fourth-quarter earnings that surpassed analyst expectations. The adjusted earnings per share for the quarter was $3.04, exceeding both the consensus estimate of $3.01 and BofA Securities’ prediction of $2.85. However, the company’s revenue slightly missed analysts’ projections, amounting to $3.02 billion against the anticipated $3.04 billion. The adjusted operating ratio, a significant efficiency measure, showed remarkable improvement from 68.8% in the same period last year to 64.9% in the fourth quarter. This enhancement is attributed to productivity initiatives.
TD Cowen analysts updated their outlook on Norfolk Southern, increasing the price target from $247.00 to $272.00 while maintaining a Hold rating on the stock. The revision followed Norfolk Southern’s performance that surpassed both the firm’s forecasts and consensus expectations. BofA Securities analyst Ken Hoexter also increased the price target for Norfolk Southern from $281.00 to $292.00, reiterating a Buy rating on the stock.
Norfolk Southern has already realized approximately $300 million in productivity savings, exceeding its target of $250 million. Looking ahead, the company aims to achieve an additional $150 million in savings and a 150 basis point improvement in its operating ratio for 2025. These are recent developments indicating a positive trend in Norfolk Southern’s performance.
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