Goldman Sachs Lowers Norfolk Southern PT To $59

Goldman Sachs is adding Norfolk Southern NSC to its Sell List “with 2.5% downside to our 12-month, $59 price target (from $62).” Goldman Sachs said that the key drivers of its relative Sell include (1) increased costs required to improve service levels that could limit margin upside relative to the other rails (2) Lower relative pricing increases and low legacy contract exposure. (3) GS' more bearish view on Appalachian coal. (4) Expectations for slowing intermodal growth, given sluggish US retail sales and lessening inventory restocking. “Despite our expectation for slower relative earnings growth, Norfolk is trading at a valuation premium to railroads peers,” Goldman Sachs concludes. Norfolk Southern currently trades at $60.55.