Railroad operator Norfolk Southern Corp. ( NSC ) on Tuesday saw its shares upgraded by analysts at TD Newcrest, who highlighted the company's solid positioning and dividend yield.
The firm said it boosted its rating on NSC from "Hold" to "Buy" with a $92 price target, suggesting a massive 42% upside to the stock's Monday closing price of $64.91.
A TD analyst commented, "The rails are trading at an average multiple of 12.0x P/FTM EPS, which is just below the low-end of the group's historical average valuation range of 12.3-15.7x P/FTM EPS (average of 14.0x), and roughly consistent with where the group's valuation stood in April/May 2009 and in late-2002/early-2003; but above the lows of ~10x in early-2000 and 8-9x during the financial crisis. We would suggest that, at current levels, the rail stocks are pricing in some degree of downside risk to earnings."
Continuing, "In our opinion, NSC benefits from a high-quality management team that has a track record of consistent execution. The stock currently offers a dividend yield of 2.7%, which is the highest in the group."
Norfolk Southern shares rose $1.14, or +1.8%, in premarket trading Tuesday.
The Bottom Line
Shares of Norfolk Southern ( NSC ) have a 2.65% dividend yield, based on last night's closing stock price of $64.91. The stock has technical support in the $60-$61 price area. If the shares can firm up, we see overhead resistance around the $70 price level.
Norfolk Southern Corp. ( NSC ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.
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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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
