In this part of our series, we’ll go through analysts’ opinions on CSX (CSX) and its peers ahead of the upcoming 4Q17 earnings release. A total 26 analysts cover CSX stock. Six (23%) have a “strong buy” rating on the company. Eleven (42%) suggest investors “buy” CSX stock. Seven (27%) recommend a “hold,” and two (8%) advise shareholders “sell” the company’s common stock.
Analysts’ target price for CSX and peers
Analysts polled by Thomson Reuters have a 12-month consensus price target of $60.6 on CSX’s stock. On January 11, the company’s closing price was $58.7, which translated into a potential return of ~4% over the next 12 months. In the last year, CSX returned more than 50% to shareowners. The peer group’s stock price target and potential returns are as follows.
- CSX’s main competitor, Norfolk Southern (NSC), has a target price of $145.2.
- Major Western US giant Union Pacific’s (UNP) has a target price of $135.9.
- The smallest US Class I railroad (XTN), Kansas City Southern (KSU), has a price target of $117.7 with a return potential of 10.5%.
- Canada’s largest freight rail, Canadian National Railway (CNI), has a price target of 110.3 Canadian dollars with return potential of 8.2%.
- Canadian Pacific Railway (CP) has a price target of 238.3 Canadian dollars.
- The largest US short-line operator, Genesee & Wyoming (GWR), has a price target of $83.7 with a return potential of 1.6%.
Are analysts justified regarding CSX’s ratings?
The operating performance improvement technique adapted by CSX under the supervision of its former CEO, Hunter Harrison, could be the key. With his passing away, the company’s operating efficiency trajectory has halted. Gaining customers’ confidence back is one of the biggest challenges in front of the company. The overall business scenario also doesn’t seem encouraging. A lot depends on new CEO James Foote and his team to completely turn around the Jacksonville-headquartered railroad giant.
In the final part of this series, we’ll compare CSX’s valuation among the peer group.