Norfolk Southern Corporation is facing a new chapter under the leadership of Mark George, who has been appointed as the company’s new President & CEO. This comes after the termination of Alan Shaw, who was removed due to violations of company policies following an investigation into an inappropriate relationship with the company’s Chief Legal Officer.
Despite the ethical scandal and leadership shakeup, BofA Securities analyst Ken Hoexter remains optimistic about Norfolk Southern’s future. He reiterated his Buy rating on the stock, setting a price objective of $259. Hoexter’s confidence stems from the company’s commitment to enhancing operational efficiency and closing the margin gap with its competitors.
Norfolk Southern has affirmed its 2024 targets, aiming for a 66% full-year operating ratio, with a target of 64% – 65% for the second half. The company’s new leadership, alongside COO John Orr, is focused on streamlining operations and achieving these ambitious goals.
Hoexter’s price target reflects a 19x multiple on his FY25 EPS estimate of $13.60 per share, a value exceeding the typical 12x-18x range. He believes that the company is poised for accelerated earnings growth driven by productivity enhancements and a focus on volume gains and yield acceleration.
The analyst also highlights the smooth transition in leadership, noting that COO John Orr will continue to oversee the operational overhaul while new CEO Mark George brings continuity and demonstrates the firm’s management depth.
Investors seeking exposure to Norfolk Southern can consider ETFs like the iShares U.S. Transportation ETF (IYT) and the Aztlan North America Nearshoring Stock Selection ETF (NRSH).
NSC shares were up by 0.31% on Thursday, trading at $254.55.
