Morgan Stanley Attends NSC Investor Day

Morgan Stanley is reiterating its Equal-Weight rating on Norfolk Southern Corp. NSC following the company's Investor Day. In its report, Morgan Stanley writes, “NSC's investor day reaffirmed the long-term bull case for rails, but the company continues to stand alone among Class I rails in not offering long-term guidance. NSC mgmt spoke to a number of industry themes such as (1) continued strength in core price growth, (2) volume growth opportunities, particularly in export coal, and (3) further improvement in productivity and resource utilization – which have all been key pillars of our long-standing Attractive View on the rails. However, NSC's investor day stood in contrast to CSX's recent event where CSX quantified the impact of continued success of its various initiatives in the form of long-term guidance. Therefore, though we suspect that NSC is capable of generating similar long-term margin improvement and EPS CAGR as CSX given industry trends, we remain more confident in CSX's ability to reach its targets (and the upside to consensus/current trading multiples than the targets imply) given CSX's willingness to issue long-term guidance publicly. We believe investors share our relative confidence.” NSC closed at $70.53 yesterday.