Norfolk Southern (NYSE:NSC), a major rail freight company, has seen its stock hit with rating downgrades from three Wall Street brokerage firms following an earnings miss.
Analysts pointed out the company's need to catch up with its peers in the rail industry.
Stock slipped 1.8% in pre-market Monday.
Morgan Stanley analysts cut the rating from Equal-weight to Underweight on several concerns, including the gap between Norfolk Southern and its peers, modest long-term targets, and the absence of a concrete plan to achieve these goals.
They expressed skepticism about the current consensus on the company's earnings per share expectations and its stock multiple, suggesting they are less justifiable compared to its peers.
Similarly, at Stifel, analysts downgraded from Buy to Hold. They lowered the price target from $250 to $233 and pointed out that the company's self-help story isn't unfolding as expected, as Norfolk Southern has yet to deliver results that demonstrate a narrowing of its performance gap with Class-1 rail peers.
“Given recent improvements in share price and the marginal improvement in profitably for 2024, we are downgrading NSC shares,” they said.
Finally, the stock was also downgraded at TD Cowen, where analysts said the company is likely to play the catch-up game with peers.
“While the U.S. Class I rails struggle to find the next growth lever for top line growth, NSC’s cost structure should continue to notably underperform its peer group for this year.”