Norfolk Southern (NSC) Stock Forecast & Price Target

Norfolk Southern's financial outlook is bolstered by projected merchandise volume growth of 3% in 2025, surpassing the anticipated 1.2% increase in US Industrial Production, indicating robust demand for its diverse cargo services. Enhancements in operational efficiency are evident, with locomotive productivity and terminal dwell times improving by 14% and 1% year-over-year, respectively, contributing to a favorable operating ratio improvement of 130 basis points. Additionally, the company is poised for revenue growth of 2% year-over-year, which aligns positively against a backdrop of broader market expectations initially set at 1.6%.

The outlook for Norfolk Southern is negatively impacted by a decline in merchandise plan compliance and a worsening intermodal service composite, both of which reflect operational challenges. Additionally, revised estimates indicate a decrease in full-year revenue growth from 1.9% to 1.3% and an increase in the operating ratio estimate to 65%, suggesting ongoing pressure on profit margins. Lastly, the forecast for intermodal revenue growth has shifted from flat to a decline of 1%, attributed to adverse factors such as excess highway truck capacity, tariff uncertainties, and broader economic sluggishness.