Norfolk Southern stock rating downgraded to In Line by Evercore ISI

Investing.com - Evercore ISI downgraded Norfolk Southern (NYSE:NSC) from Outperform to In Line while raising its price target to $289.00 from $279.00 following the company’s takeover by Union Pacific . The railroad operator, currently trading at $277.70 with a market capitalization of $62.7 billion, has seen its stock surge 23.5% year-to-date.

The research firm noted that Norfolk Southern shares now trade within 13% of the deal price, offering limited upside potential during the expected review process.

Evercore ISI highlighted that the regulatory review is anticipated to take approximately 22 months to complete.

The firm’s new price target of $289.00 represents a $10.00 increase from its previous target of $279.00, despite the rating downgrade.

The downgrade reflects Evercore’s assessment that the stock’s near-term appreciation potential is constrained as it approaches the acquisition price.

In other recent news, Union Pacific Corporation (NYSE:UNP)’s proposed $85 billion merger with Norfolk Southern has caught significant attention. Fitch Ratings placed Union Pacific’s ’A-’ Long-Term Issuer Default Rating on Rating Watch Positive, citing potential enhancements to its business model and competitive position. Similarly, S&P Global Ratings revised Norfolk Southern’s outlook to positive, highlighting the benefits of an integrated transcontinental network spanning over 52,000 route miles. However, the merger faces challenges, as the largest rail union in the United States, SMART Transportation Division, plans to oppose the deal during proceedings before the Surface Transportation Board. This opposition could impact the merger’s progress, as the board’s approval is necessary for major railroad mergers. Additionally, Jefferies downgraded Norfolk Southern’s stock rating from Buy to Hold, maintaining a $300 price target, due to limited upside potential after recent share price increases. These developments present a complex landscape for investors to consider.

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