Citi Reiterates Buy Rating, $76 PT On NSC

Citi Reiterates Buy Rating, $76 PT On NSC

Citi is reiterating its Buy rating and $76 PT on shares of Norfolk Southern Corp. (NYSE: NSC).

“As the ruling results in the write down of receivables, which have been held on the company's balance sheet, we expect Norfolk to realize no cash flow impact,” Citi writes. “In addition, we expect no impact to Norfolk Southern's operating performance or financial position.

“We are treating the $58 million pre-tax non-cash expenses as one-time in nature and estimate the impact to GAAP EPS to be approximately $0.10 per share. On a normalized basis, we target 1Q11 EPS of $0.97, which is supported by solid operating performance, underpinned by our bullish coal outlook, and our target for 230 bps of operating ratio improvement and 29% year-over-year EPS growth. Furthermore, carloads are trending up 7.3% quarter-to-date, 270 bps ahead of our 4.6% growth target.”

Norfolk Southern closed Monday at $67.81.