Why RBC Is Turning Bullish On This Railroad

CSX Corporation’s CSX stock has been under pressure due to its fourth-quarter results being less favorable than other companies in the industry, and its valuation has fallen “toward the lowest level relative to peers,” according to RBC Capital Markets.

The CSX Analyst: Walter Spracklin upgraded the rating for CSX from Sector Perform to Outperform, while raising the price target from $37 to $39.

The CSX Thesis: The gap in volume performance between CSX and its peers is likely to narrow going forward, and there could be “a strategic shift as the next generation of CSX railroaders take charge,” Spracklin said in the note.

“CSX noted recently that hiring initiatives are expected to pay off as we go into Q2, signaling upside to consensus expectations in that quarter,” he added.

“We point to a solid bench strength at CSX, which is grounded in the key tenets of Precision Scheduled Railroading,” the analyst wrote. He further mentioned, “There have been mgmt. changes at several of the Class 1 railroads of late; and we see CSX as being viewed positively due to this deep bench of operating expertise.”

CSX Price Action: Shares of CSX had declined by 0.35% to $35.48 at the time of publication Thursday.