CSX stock extends gains as analysts applaud Q1 earnings results
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CSX Corp. (NASDAQ:CSX) rose sharply into afternoon trading on Friday as sell-side analysts lauded the Q1 earnings results and raised estimates. 

Shares of the Florida-based railroad operator notched a top and bottom line beat for the quarter while efficiency came in about 200 basis points better than anticipated. Management expects continued efficiency improvement through the remainder of the fiscal year and continued revenue growth as pricing gains as well as âsolid volume growth in merchandise and coalâ sustain momentum.

Among the reviews of the results, Morgan Stanley, Stifel, and Bank of America each raised earnings estimates for the remainder of the year. While Morgan Stanley maintained a Hold-equivalent rating, the bankâs analysts advised that â2023 numbers are probably suitably deriskedâ after the report. As such, equity analyst Ravi Shanker raised his price target from $24 to $26.

On the more optimistic end, both Stifel and Bank of America reiterated Buy ratings while raising targets from $35 to $37 and $35 to $36, respectively. Stifel hiked its 2023 EBITDA forecast to $7.55B from $7.35B, but kept EPS forecasts unchanged. Bank of America hiked both EPS and revenue forecasts through 2025 to justify the price hike.

âCSX reported carload trip plan compliance of 86% in 1Q against an average of 64% in 2022. While there are various ways to calculate "on time", a 34% improvement is remarkable irrespective of the definition. Importantly, CSX is not having to break the bank from a cost perspective to drive the improvement,â Stifel analyst Benjamin Nolan told clients. âAs a consequence, CSX is able to gain share/volume and improve the utility of people and equipment thus keeping OR reasonable despite cost inflation. These improvements appear to be opening doors for new business wins, which should enable volume gains despite macro headwinds. CSX shares trade at the low end of the valuation range in the peer group, but if they keep this up, it won't be that way for long.â

CSX (CSX) stock rose 3.7% in afternoon trading on Friday.
Read more on the details of the earnings results.