CSX Corp Has 39% Upside, Says Buckingham

• Buckingham Research analysts Jeffrey Kauffman and Ryan Mueller reiterated a Buy rating and $34 price target on shares of CSX Corporation CSX on Wednesday.
• The analysts trimmed earnings estimates on lower fourth-quarter coal volumes. However, they pointed out that catalyst visibility is clearer for 2016.

The analysts decided to cut their earnings estimates decline by $0.07 per share for 2015, to reflect lower than expected fourth quarter shipments. They also reduced their 2016 estimate by $0.08 per share to account for "lower base volume levels and a lower 1Q assumption for coal shipments."

Related Link: Barclays Cuts Outlook For Rail Sector Heading Into 2016

The note went on to point out that, while coal, crude and metals traffic will continue to impact on top line progress, it should moderate substantially after the first quarter of the year.

"Other traffic commodities, driven by Chemicals, Intermodal, Home Building and Autos have stronger longer term upside versus the transient conditions weighing on the shares," the experts said.

Buckingham looked into CSX's financials. They think cash flows will continue to expand starting in 2016, driving extra returns to shareholders. Even in spite of the EPS adjustment, at current levels, CSX is one of the firm's top rail ideas.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.