Barclays cuts CSX to Hold on coal outlook, limited 2015 growth


CSX shares slipped a bit today after a Barclays downgrade, citing a lack of catalysts for the railroad and the firm's dim outlook for coal.

While the firm says CSX is still the cheapest in the sector, it sees marginal upside for the stock given a limited growth outlook in 2015 and notes that a difficult start to 2014 implies further headwinds, as CSX’s cost and margin performance has lagged peers in recent periods.

EPA regulations and soft exports drive Barclays' negative long-term view on coal, and coal represents an outsized profit to CSX relative to other businesses; the firm estimates a further 16% reduction in domestic coal for CSX through 2018.

In addition to cutting its CSX target price to $30 from $32, the firm lowers its target on Norfolk Southern (NSC) by $1 to $100.

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Comments (13)
  • deercreekvols
    , contributor
    Comments (9616) | Send Message
     
    Reduction in coal transports have been replaced by "other" business.

     

    "Lack of catalysts?"

     

    (CSX) is in great shape and this is a BUY signal to me.

     

    I will happily add shares on the expected dip due to this Barclay's thought.
    3 Apr 2014, 06:29 PM Reply Like
  • Roy Blanchard
    , contributor
    Comments (53) | Send Message
     
    I'm with deercreek. They're doing all the right things to replace coal and take more points out of the OR. Cindy Sanborn most likely understands what makes customers happy better than any of her peers. Having an ex-CFO as COO means performance metrics mean something. I don't own shares but perhaps I ought to. I have a $42 intrinsic value based on financial strength and the earnings record.
    3 Apr 2014, 07:16 PM Reply Like
  • doghousecontributor
    , contributor
    Comments (3020) | Send Message
     
    Did Barclays just wake up form a long nap? Tell us CSX investors something we don't know. Yes, coal shipments have been on the decline, but CSX has been adding in other areas such as intermodal & oil. I guess Barclays didn't get that memo. "Analysts"???.... give me a break. You can back to sleep now, and I will keep on investing in CSX!
    3 Apr 2014, 08:12 PM Reply Like
  • joverage
    , contributor
    Comments (57) | Send Message
     
    Agree with all you guys. Barclays is a notoriously poor rating service based upon their characteristic narrow perspective focus on rated companies' weak areas. They are generally, as go-4-it points out, late to the party. (A bit British, whot?)
    3 Apr 2014, 09:02 PM Reply Like
  • Roy Blanchard
    , contributor
    Comments (53) | Send Message
     
    Thx, guys good to know I've got company.
    3 Apr 2014, 10:02 PM Reply Like
  • jw4golf
    , contributor
    Comments (339) | Send Message
     
    barclays has its own problems
    4 Apr 2014, 12:28 AM Reply Like
  • Dave"T"
    , contributor
    Comments (64) | Send Message
     
    There may be a surprise in the next quarter for those that still use coal shipments as a basis for their evaluations. Although the weather has been used in a CSX release. I feel that, with all things considered CSX is going to look better than what has been projected by the naysayers.
    4 Apr 2014, 09:20 AM Reply Like
  • Wildweezel1
    , contributor
    Comments (2) | Send Message
     
    Rumor of coal's demise may have been somewhat exaggerated
    4 Apr 2014, 03:24 PM Reply Like
  • Those Who Wait
    , contributor
    Comments (905) | Send Message
     
    Let's hope so. I've held this stock since the 80s and it's gone nowhere fast. IMHO, one of Icahn's failed takeovers.
    4 Apr 2014, 10:28 PM Reply Like
  • Those Who Wait
    , contributor
    Comments (905) | Send Message
     
    For color, here's an earlier post of mine re above: "As a CSX shareholder for quite a few years, I recall the following article from Streetinsider, February 21, 2008: "Icahn held 2.9 million shares of CSX at the quarter ended 12/31/07. Icahn told Bloomberg that stake is now about 12-13 million shares. The FTC approval will allow Icahn to purchase as much as $1.6 billion on CSX stock, according to the company. Icahn said he boosted the CSX position related to the action of The Children's Investment Fund, the activist investor group that is looking for 5 seats on the company's board of directors. Icahn told Bloomberg, the dissident group will increase shareholder value. He was quoted as saying, "there's absolutely no downside." Yeah, right. No upside either.
    4 Apr 2014, 10:41 PM Reply Like
  • doghousecontributor
    , contributor
    Comments (3020) | Send Message
     
    Well @ Those who wait, The past is past, and I got in last year at $23, and like my return so far. So, maybe it didn't pan out for you, but that's investing. Sometimes you win, and sometimes you lose. Get over it, and move on. You remind me of a SA poster named budavar about another stock I own...SDRL. He is all grumpy over what happened years ago with JF Fredikson's shipping company Frontline. Every SDRL article (lately that would be many), he chimes in and complains about Frontline, a JF company, but has nothing to do with the present SDRL stock.

     

    Like an Eagles song...GET OVER IT
    5 Apr 2014, 12:32 AM Reply Like
  • Those Who Wait
    , contributor
    Comments (905) | Send Message
     
    You're rude. I still own CSX but I still strongly disagree with what was done to the company. You need to get over yourself.
    6 Apr 2014, 01:57 PM Reply Like
  • doghousecontributor
    , contributor
    Comments (3020) | Send Message
     
    I don't believe I am rude, you just sound disgruntled. If you don't like the investment, then just sell it and move on. I have done that quite a few times. It's the investing world, and sometimes it just doesn't work out. If you want to complain on SA, then you may get replies sometimes...like mine. Oh well, I didn't mean to sound rude, but just sell it and find another stock that may reward you better down the road. I got in at a good time I believe, as well as wanted a rail in my portfolio. So far so good, I am happy with CSX.
    8 Apr 2014, 12:48 AM Reply Like
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