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Norfolk Southern Cut to “Neutral” at Deutsche Bank; Potential Downside Looms (NSC)

Railroad operator Norfolk Southern Corp. ( NSC ) on Wednesday caught a big downgrade from analysts at Deutsche Bank.

The firm said it cut its rating on NSC from "Buy" to "Hold," citing potential for lower coal shipments.

A Deutsche analyst commented, "Although shares have traded off 12.7% since their recent peak on July 7 (vs. 11.7% decline in the S&P 500), NSC shares have held up better than its railroad peers, which are down 18.0% over the same period. However, our sensitivity analysis highlighted the greatest downside potential in NSC at current levels. Given an expected pick-up in Australian coking coal production and economic uncertainty, we are cautious about NSC's export met coal 2012 comparisons (competitor CSX has already lowered export coal expectations)."

Norfolk Southern shares were unchanged in premarket trading Wednesday.

The Bottom Line

Shares of Norfolk Southern ( NSC ) have a 2.56% dividend yield, based on last night's closing stock price of $67.21. The stock has technical support in the $60-$65 price area. If the shares can firm up, we see overhead resistance around the $70-$71 price levels.

Norfolk Southern Corp. ( NSC ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.3 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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