Norfolk Southern Posts Q4 Beat, Analysts Expect Continued Productivity Gains

Shares of Norfolk Southern Corp (NYSE:NSC) remained volatile in early trading on Thursday, after the company reported mixed fourth-quarter results.

Here are some key analyst takeaways.

• Stephens analyst Daniel Imbro reiterated an Equal-Weight rating, while raising the price target from $260 to $275.
• Benchmark analyst Nathan Martin maintained a Buy rating and price target of $285.
• Raymond James analyst Patrick Tyler Brown reaffirmed a Market Perform rating on the stock.

Check out other analyst stock ratings.

Stephens: Norfolk Southern reported its fourth-quarter adjusted earnings at $3.04 per share. The company topped consensus of $2.94 per share, "driven by better expense management, lower taxes, and higher revenue," Imbro said in a note. The company guided to "additional progress on expense control" in 2025, he added.

Management projected 3% revenue growth for 2025, "driven by volume growth and healthy core pricing offsetting headwinds from coal and fuel," which came slightly below Street expectations of 3.4%, the analyst stated. "Commentary suggests that volume growth will be strongest in intermodal, followed by merchandise, with coal likely declining in 2025," he further wrote.

Benchmark: Norfolk Southern reported fourth-quarter revenue of $3,024 million, surpassing Street expectations by $9 million, Martin said. The company exceeded its full-year productivity target of $250 million by around $50 million and improved its operating ratio by 160 basis points, versus guidance of by 100-150 basis points, he added.

Management expects Norfolk Southern to exceed its target of around $150 million in incremental annualized productivity gains, the analyst stated. "This will be underpinned by a refreshed operating plan that will focus on continued network gains and stability to further enhance service," he further wrote.

Raymond James: "The situation at Norfolk Southern continues to improve despite recent management changes and a tepid demand/ truck/coal environment," Brown wrote in a note. After a turbulent year in 2023 and the first six months of 2024, the second half of 2024 "was a positive turning point for the company," he added.

The new COO John Orr undertook productivity initiatives, the analyst stated. "We call out exceptional gains on labor productivity, as NS was able to decrease headcount by -4% y/y in 2H24 in a +5% y/y volume growth environment, all while keeping service intact," he further said.

Price Action: Shares of Norfolk Southern had risen by 0.83% to $258.92 at the time of publication on Thursday.

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Image: Courtesy of Norfolk Southern