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On Thursday, Bernstein analysts maintained their Market Perform rating and $37.00 price target on shares of CSX Corporation (NASDAQ:CSX), ahead of the company's fourth-quarter earnings report anticipated to be released after the market closes on Friday. With a market capitalization of $64.85 billion and trading near its 52-week low, the transportation giant has caught investors' attention. According to InvestingPro data, 17 analysts have recently revised their earnings expectations downward for the upcoming period. Analysts project a slight operational shortfall for the quarter, with earnings per share (EPS) expected to meet current projections.
Bernstein analysts anticipate CSX's total revenue to fall by 3.3% year-over-year (YoY), attributing the decline to a 1.4% decrease excluding fuel contributions, alongside a 50 basis points increase in volume growth. The company, which generated $14.68 billion in revenue over the last twelve months with an impressive gross profit margin of 48.98%, faces some headwinds. The expected reduction in revenue per unit (RPU) is driven by a combination of lower commodity earnings, particularly from export coal, and a change in the mix of freight services, with intermodal sectors growing and merchandise sectors remaining stable. For deeper insights into CSX's financial health and detailed metrics, InvestingPro subscribers can access the comprehensive Pro Research Report, part of the coverage available for 1,400+ US equities.
Operating income for CSX is forecasted to drop by 6% YoY due to the company's investments in enhancing service levels in preparation for future improvements. The analysts have identified specific risks that could potentially lower the consensus for the fiscal year 2025, including a tunnel outage that necessitates rerouting and additional handling, weaker benchmark pricing and an operational halt at Arch Coal (NYSE:ARCH)'s Leer mine complex affecting export coal, and a gradual increase in volume leading to reduced operating leverage.
The year 2025 is expected to be a transitional period for CSX, as the company navigates through several near-term challenges. Despite these headwinds, Bernstein analysts believe that CSX is well-positioned for the long term but suggest that investors may want to remain cautious for the time being.
In other recent news, CSX Corporation has been the subject of multiple analyst revisions. CFRA upgraded CSX's stock from Hold to Buy, raising the price target to $38.00. This change reflects a positive shift in the firm's outlook on coal demand, influenced by recent policy shifts. Jefferies also upgraded CSX stock to Buy, anticipating growth in the transportation and logistics sector. Citi adjusted CSX's stock price target to $40.00, maintaining a Buy rating despite challenges due to hurricane-related network repairs. RBC Capital Markets, however, reduced its price target for CSX to $34, maintaining a Sector Perform rating, due to lower than expected volumes.
In recent developments, CSX reached tentative labor agreements with the International Brotherhood of Electrical Workers and the National Conference of Firemen & Oilers, including improvements in wages, healthcare benefits, and paid time off. Furthermore, CSX is seeking the Supreme Court's intervention to continue an antitrust case against Norfolk Southern Corp (NYSE:NSC). These developments are part of the recent news surrounding CSX Corporation.
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