Norfolk Southern (NYSE:NSC) was downgraded to Neutral from Buy, with a new price target of $215, down from $266 per share in a note Monday.
Analysts told investors that the service faces challenges while the company's costs are too high.
"NSC experienced a data center outage Friday (Sep 29) evening, which suspended its dispatching, train starts, and terminal operating systems until Sep 30 morning," the analysts explained.
They added that the company expects to see service impacts to its operations over the next two weeks as it works to mitigate congestion caused by the outage. In addition, it follows a similar outage on August 28.
"We believe this is an increasing risk to future earnings as a lack of service consistency could lead to share loss and challenged pricing gains," the analysts said.
They also noted that they expect negative leverage as well as increased fuel costs to lead to lower margins.