Norfolk Southern's (NSC) relatively weaker yields and operating ratio, combined with the Surface Transportation Board's rejection of its initial application for merger with Union Pacific (UNP), could be an overhang on the stock, UBS said in a Friday research report.

The brokerage cut its 2026 EPS estimate to $11.95 per share from $12.45, assuming weaker revenue growth and 155 basis points of operating ratio pressure. It also lowered the 2027 EPS forecast to $13.30 from $13.90.

UBS said it expects 2026 operating income to decline 3.1% to $4.14 billion due to higher inflation dollars, an increase in insurance premiums, and higher wages.

The brokerage said it downgraded the stock to a neutral rating from buy and adjusted its price target to $342 per share from $320.

Price: 306.57, Change: +0.97, Percent Change: +0.32