(The following article was posted on Newratings.com on May 12.)
NEW YORK — Analyst John Larkin of Legg Mason initiates coverage of Norfolk Southern with a “buy” rating. The 12-month target price is set to $28.
Shares of Norfolk Southern, a leading rail transportation company in the US, are currently trading at $23.62.
According to Legg Mason’s research note published this morning, Norfolk Southern’s management team is seasoned and competent. The company has been maintaining disciplined operations on account of its proprietary Thoroughbred Operating Plan, the analyst says. The company would continue to benefit in the forthcoming quarters from improving operational efficiencies and the healthy demand for its products, the analyst believes.
According to Legg Mason, Norfolk Southern has reduced its debts by $1.4 billion since 2000, lowering its debt-to-capital ratio from 60.6% in 1999 to 49.1% at present. The company’s marketing initiatives are expected to drive revenues in the forthcoming quarters, the analyst adds. Norfolk Southern is poised to benefit from the healthy economy, limited transport capacity and the potential for a rebound in coal exports in the forthcoming quarters, Legg Mason mentions.
The EPS estimates for 2004 and 2005 are $1.75 and $1.89, respectively. The P/E estimates for 2004 and 2005 are 13.5x and 12.5x, respectively.
Legg Mason initiates coverage of Norfolk Southern with a “buy” rating.