UPDATE: Citigroup Upgrades CSX As Stock Feels Like A Must Own

In a report published Thursday, Citigroup analyst Christian Wetherbee upgraded the rating on CSX Corporation CSX from Neutral to Buy, and raised the price target from $34.00 to $41.00. In the report, Citigroup noted, “We are upgrading CSX to Buy from Neutral and raising our target to $41. We believe several factors support upside and we see downside risk as minimal, making CSX a ‘must own' name. On the positive side, we believe CSX is in the early stages of EPS growth acceleration (driven in part by accelerating core pricing), which should persist through 2015, service has begun to recover, and management has been re-focused on costs following the approach by CP to merge. CSX also has the highest operating ratio of the industry, providing potential for margin and EPS improvement longer term. On the downside, coal remains a headwind, but prospects of M&A should provide a floor and while M&A is not in our base case, we can't rule it out.” CSX Corporation closed on Wednesday at $36.00.