We maintain our Outperform recommendation on Norfolk Southern Corp. (NSC). The company reported a stellar third quarter, with earnings per share surpassing the Zacks Consensus Estimate and year-ago results backed by strong pricing and shipment across all segments.
We believe this momentum in pricing and volume will continue on growing market demand and capacity constraints in the truck freight transportation market. Additionally, the company’s focus on improving network and service offerings as well as increasing investment will also yield solid growth both in the near and long term.
Further, the strong balance sheet with healthy cash flow remains attractive for investors driving higher returns via increased dividends and share buybacks. Hence, we set a target price of $83.00 per share, based on 15.8x our 2011 EPS estimates.
