Goldman Sachs has moved Norfolk Southern (NYSE: NSC) from Buy to Neutral, keeping its price target at $278. This shift reflects a broader reallocation of confidence toward the trucking sector, which is seen as better positioned to recover earnings faster than railroads in the current macro backdrop.
📌 Despite the downgrade, Norfolk Southern continues to perform steadily. In Q1 2025, it delivered adjusted EPS of $2.69, modestly beating expectations. Management reaffirmed full-year guidance, projecting 3% revenue growth and a 150-basis point improvement in the operating ratio—signs of healthy execution even in a challenging environment.
📌 The downgrade stems from mounting economic headwinds, including coal demand variability and sluggish industrial activity, which affect rail volumes more directly than truck-based logistics. Goldman also cited a more favorable earnings risk/reward dynamic in the trucking space as a rationale for shifting its investment preference.
📌 Norfolk Southern’s current valuation at 16.9x P/E is below its five-year average of 19.5x, offering potential upside, particularly if cyclical recovery trends emerge in the latter half of the year.
💲 Dividend Fundamentals:
✅ Norfolk Southern sports a 2.19% dividend yield with an annual payout of $5.40 per share.
✅ Its payout ratio is a conservative 36.8%, suggesting room for continued increases.
✅ The company has a solid dividend track record, growing payouts consistently over the past decade.
While Goldman’s downgrade signals a pause in bullish sentiment, Norfolk Southern’s fundamentals remain intact. For investors seeking long-term income with exposure to infrastructure and freight logistics, NSC still deserves attention.