Market Overview

CSX Valuation A Bit Off Track; BMO Lowers To Market Perform

CSX Valuation A Bit Off Track; BMO Lowers To Market Perform

While CSX Corporation (NASDAQ: CSX)'s medium-term outlook looks “favorable,” the company may witness some pressures in the near term, BMO Capital Markets’ Fadi Chamoun said in a report. He downgraded the rating on CSX from Outperform to Market Perform following the recent run-up in shares.

Chamoun mentioned that the share price appreciation on strong Q3 results renders “the risk/reward in the stock more balanced.” The price target has been raised from $34 to $35.

Growth Outlook

“Excluding the coal segment, CSX's volumes have increased at a pace slightly exceeding GDP growth over the past five years,” Chamoun pointed out. He added that volume had been driven mainly by the intermodal segment. While this segment could continue to contribute, the coal market may become less challenging moving head.

The analyst added that CSX should be able to grow earnings even without volume growth if pricing growth “continues to track around the rate of cost inflation (high likelihood).” The company faces significant opportunities to improve productivity and its execution capabilities seemed to have improved.

“We expect that capital spending could moderate as a result of excess locomotive capacity and declining PTC related spending in the coming several years. The combination of lower capital intensity and improving operating margins implies higher ROIC, which is positive for valuation,” Chamoun wrote.

Latest Ratings for CSX

Jul 2019Initiates Coverage OnNeutral
Jul 2019DowngradesBuyHold
Jun 2019MaintainsBuy

View More Analyst Ratings for CSX
View the Latest Analyst Ratings

Posted-In: BMO Capital Markets Fadi ChamounAnalyst Color Downgrades Price Target Travel Analyst Ratings General


Related Articles (CSX)

View Comments and Join the Discussion!

Latest Ratings

View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

Can Disney Earnings Be The Hit Doctor Strange Is? And What's Up With ESPN?

What Will Happen To Dodd-Frank Under A Trump Administration?