CSX stock falls as Bernstein sees market overreaction to BNSF deal

Investing.com - CSX Corporation (NASDAQ:CSX) stock fell Monday after the company announced new intermodal services with BNSF Railway, prompting Bernstein to suggest investors were overreacting to the news. According to InvestingPro data, CSX maintains a "GOOD" financial health score, with the stock currently trading below its Fair Value, suggesting potential upside opportunity.

The two railroads revealed plans to launch new intermodal services connecting Southern California with North Carolina and Jacksonville, Phoenix with Atlanta, and new international services linking New York/New Jersey and Norfolk, Virginia with Kansas City.

Bernstein analyst David Vernon noted these services had been in development for over a year and should begin appearing in financial results this fall, according to information provided by CSX.

Vernon questioned the timing of the announcement, suggesting it "pulls some of the merger premium out of the stock" and "signals that a deal may be less imminent than some have been expecting." The analyst added that while the partnership raises questions about whether railroads can achieve seamless service through partnerships rather than mergers, the announcement covers only a small portion of overall rail traffic.

The analyst maintained that these new intermodal services, representing just "a handful of new lanes" in a segment that accounts for approximately 20% of industry revenue, would likely have minimal impact on ongoing merger proceedings between Union Pacific and Norfolk Southern or potential transactions involving CSX.

In other recent news, Canadian Pacific Kansas City reported its second-quarter 2025 earnings, which missed analysts’ forecasts. The company recorded an earnings per share (EPS) of $1.12, slightly below the expected $1.13, and generated $3.7 billion in revenue, falling short of the anticipated $3.8 billion. In a related development, Stephens raised its price target for Canadian Pacific Kansas City to $97 from $95, maintaining an Overweight rating despite the earnings miss. The railway operator experienced lower revenue per carload and a slightly higher operating ratio, which was partially offset by higher below-the-line items. Additionally, Canadian Pacific Kansas City entered into an amendment of its credit agreement to extend loan maturities, in collaboration with the Bank of Montreal and various lenders. Evercore has expressed a preference for Canadian Pacific Kansas City stock amidst changes in U.S. rail services and merger-related uncertainties. These recent developments provide investors with a comprehensive view of the company’s current financial and operational landscape.

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