Norfolk Southern initiated with a Buy at Jefferies

Jefferies initiated coverage of Norfolk Southern with a Buy rating and $300 price target. While the rail industry has historically enjoyed pricing power and a “strong appetite” for shareholder returns, we’re at or near peak margin and reinvestment to improve service and bring volumes back onto the rails could pressure buyback activity in the near-term, the analyst tells investors in a research note. The firm prefers shares of Canadian Pacific Kansas City and Norfolk Southern for the former’s “idiosyncratic growth” and the latter’s and margin story. It believes valuations in the group look full otherwise. Canadian Pacific and Norfolk offer “idiosyncratic stock-specific stories” that could drive above-peer earnings growth in the long term, contends Jefferies.