BofA/Merrill Lynch Downgrades Norfolk Southern (NSC) to Neutral

BofA/Merrill Lynch downgraded Norfolk Southern (NYSE: NSC) from Buy to Neutral with a price target of $111.00 (from $122.00) as service and fuel expenses rise.

Analyst Ken Hoexter said the company noted that its composite service metric, which measures train performance, operating plan adherence, and connection performance (right car, right train) has fallen to new lows, dropping below 60% in October from 69% in 3Q, and down from 83% in 2013. In addition, the company noted it will lose $60-$80 million from lower fuel surcharges, given the rapid decline for its surcharge on WTI and the slower decline on the price it pays at the pump.

The firm cut 4Q14, 2014, and 2015 EPS estimates 7%, 2%, and 3%, to $1.63, $6.39, and $7.15, from $1.75, $7.35, and $8.35, respectively.

For an analyst ratings summary and ratings history on Norfolk Southern click here. For more ratings news on Norfolk Southern click here.

Shares of Norfolk Southern closed at $107.07 yesterday.

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