(The Associated Press circulated the following on September 2.)
NEW YORK — Shares of railroad operators mostly fell Tuesday afternoon as the broader market rally lost steam and an analyst downgraded Norfolk Southern Corp.
Stifel Nicolaus & Co. analyst John G. Larkin cut the Norfolk, Va.-based rail to “Hold” from “Buy,” saying the stock had gotten too expensive. Shares have jumped about 46 percent so far this year, compared to an almost 13 percent loss for the Standard & Poor’s 500.
Larkin also suggested slow overall freight demand might hurt the company in the near future.
“While we continue to admire the company’s operations and management team, we do not see a near-term catalyst propelling the company’s shares to significantly higher levels especially in light of the persistent weakness in freight markets across the eastern U.S.,” Larkin wrote in a note to investors.
Earlier Tuesday, investors cheered a steep drop in oil prices on the news that the Gulf Coast’s oil facilities largely avoided damage in Hurricane Gustav.
The railroads that service parts of Louisiana and Texas were still assessing the damage Tuesday afternoon. Union Pacific Corp. spokeswoman Raquel Espinoza said the company has crews surveying damage along its lines including down power lines, wind damage and fallen trees. Burlington Northern Santa Fe Corp. also said it was gauging damages Tuesday and several tracks still remained closed. Meanwhile, a track operated by Canadian National that also services Amtrak trains was partially washed out.
In afternoon trading, shares of Union Pacific Corp. fell $2.25, or 2.7 percent, to $81.65. Burlington Northern Santa Fe Corp. lost $1.42 to $105.98. Norfolk Southern fell $3.19, or 4.3 percent, to $70.34. Kansas City Southern gave up 48 cents to $50.95.