Norfolk Southern's Operational Turnaround To Drive Over 20% EPS Growth Through 2027, Analyst Says

RBC Capital Markets analyst Walter Spracklin upgraded Norfolk Southern Corporation NSC to Outperform from Sector Perform and maintained the price target at $270.

The bullish stance reflects significant improvement expected in operating ratio (>12ppt) and the subsequent meaningful EPS growth.

With expected operational turnaround and EPS growth set to outperform and valuation discounted, the analyst sees the company as an attractive investment opportunity at current levels.

Consequently, Spracklin estimates EPS CAGR of +20% 2024-27 (ahead of consensus +16%) on a 12.6ppt improvement in operating ratio by 2027 (vs. Q1/24). 

The analyst expects EPS of $11.74 for FY24, $14.74 for FY25, and $17.55 for FY25.

In April, Norfolk Southern reported a 4% Y/Y decline in the first quarter railway operating revenue, missing consensus estimates.

Investors can gain exposure to the stock via TCW Transform Supply Chain ETF SUPP and First Trust Nasdaq Transportation ETF FTXR.

Also Read: Norfolk Southern Shareholders Vote On CEO’s Future, Deny Activist Investor’s Overhaul Plan

Price Action: NSC shares are down 1.78% at $226.51 at the last check Thursday.

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