Jefferies Comments on CSX Corp.'s "Well-Attended Investor Day"

CSX Corp. CSX held a “well-attended investor day in Detroit that included new mid-decade financial targets,” Jefferies reports. “These targets imply a doubling of EPS and $11 of cumulative dividends by 2015, which we estimate would support annual total return 15%- plus for the next five years,” Jefferies writes. “From a financial standpoint, the highlight was enhanced longer-term guidance around the company's 2015 financial target of a 65% operating ratio (OR). CSX is now targeting an 18%-20% EPS CAGR through 2015, which we estimate implies mid-decade earnings power of as much as $10. A 14.5x multiple would imply a $145 stock (a near doubling from $75 currently) over the next 4-5 years. “Combined with approximately $11 of cumulative dividends over that time (based on a 30%-35% payout ratio), annual total return would exceed 15% through 2015.” CSX closed Wednesday at $75.44.