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RBC Capital upgraded CSX Corp. (NYSE:CSX) to "outperform" Thursday after CSX management provided guidance for only 5% to 10% decline in thermal coal traffic in 2013. The analyst firm sees higher multiples on the shares to a more normalized level going forward. It also raised its price target on CSX from $25 to $27 a share. The railroad also has had other positives recently.

Other recent positives for CSX:

  • Earlier in the week, BMO Capital Markets reiterated its "outperform" rating earlier in the week and slightly raised its priced target to $26 a share.
  • Company's management also stated they expected $130mm in labor cost savings in 2013.
  • CSX also slightly beat on the revenue side during its recent earnings report on Tuesday.
  • Finally, the railroad could benefit from the low water levels in the Mississippi river which is diverting barge traffic.

CSX Corporation provides rail-based transportation services. It offers traditional rail service and the transport of intermodal containers and trailers.

4 reasons CSX provides value at $22 a share:

  1. The company should benefit from strong auto sales, the recovery in the housing & construction markets and an increase in manufacturing activity.
  2. CSX yields 2.6% and has more than tripled its dividend payout over the past half dozen years.
  3. The company has beat earnings estimates each of the last four quarters. It also sports a forward P/E of less than 11, a discount to its five year average (13.1).
  4. After bouncing off long-term technical support, the stock has gained momentum and just crossed its 200 day moving average (See Chart).

(click to enlarge)

Source: CSX Corp: Railroad Is Getting Back On Track