BofA raised Norfolk Southern (NYSE:NSC) to Buy from Neutral in a note Friday, with analysts lifting the firm's price target on the stock to $248 from $204 per share.
The analysts cited the business's progress on service and volume recapture as two of the reasons for the upgrade.
"Our target multiple moves toward the top of its 5-year 15x-20x range, as NSC appears set to post better-than-expected 4Q volumes," wrote the analysts.
The analysts also said the company has easier comps into the first half of 2024, while it can also generate solid operating leverage on sequential fluidity improvement (following its February East Palestine derailment).
Furthermore, the analysts noted that the company is posting better-than-expected network resiliency after recent network outages.
"We are set to meet with Norfolk Southern next Thursday in Atlanta. We look to hear further progress on NS’ ability to shed $40-$50 mil/qtr in service recovery costs. NS’ 3Q23 operating ratio of 69.4% should be its worst level in 2023 as it improves ops," concluded BofA