Shares of CSX pointed to a fourth straight advance on Wednesday, after jumping above resistance on Tuesday, a week ahead of its third-quarter earnings report. JPMorgan upgraded CSX stock on Wednesday, even as analysts predict profit falling nearly 20% compared to last year.
JPMorgan on Wednesday upgraded CSX to overweight from a neutral rating and added it to the the JPMorgan "focus list" as a prime value option. Analyst Brian Ossenbeck also raised its price target on the rail stock to 40, up from 37.
"CSX has the best near-term growth opportunity with top-tier service and the easiest 4Q2023 comps combined with a clear long-term growth strategy," Ossenbeck wrote in a research note Wednesday.
CSX stock edged up 0.2% to 31.61 Wednesday during market trade. On Tuesday, shares advanced 1.5% to 31.54, jumping back above their 200-day line. Meanwhile, the broader IBD-tracked Transportation-Rail industry group has declined nearly 9% on the year. Union Pacific joined CSX in creeping up to its 200-day line Tuesday.
Ossenbeck also on Wednesday lowered his price target on Union Pacific stock to 236 from 254 and kept a neutral rating.
The bullish tone from JPMorgan on CSX comes as Goldman Sachs on Tuesday cut its CSX price target to 37, down from 39 and maintained a buy rating.
Last week, Barclays analyst Brandon Oglenski lowered the firm's price target on CSX to 38 from 40 and kept an overweight rating on the shares. Oglenski wrote that Q3 was the fourth consecutive period of a broad-based freight recession with incremental margin pressure for most transports coming from higher fuel prices.
Oglenski added that most North America transportation stocks have lagged, setting up for a better 2024.
CSX Stock: Eyes On Transport Stocks Ahead Of Earnings
CSX is set to report third-quarter earnings late on Oct. 19 with analysts predicting EPS falling 17% to 43 cents. Analysts project revenue totaling $3.55 billion, down 9% vs. Q3 2022, according to FactSet.
Meanwhile, other transport stocks are poised to report earnings. Among railroads, Union Pacific announces early on Oct. 19 and Norfolk Southern follows on Oct. 25.
"Rail traffic, although improving, remains in uncertain territory along with the economy," Association of American Railroads Senior Vice President John T. Gray said in a statement on Oct. 4.
Meanwhile, trucking and logistics company J.B. Hunt Transport announces Q3 financials on Oct. 17. Knight-Swift Transportation is also set to report third-quarter earnings on Oct. 19.
Ossenbeck added Wednesday that JPMorgan is positive on JBHT ahead of earnings and sees it as a "positive catalyst watch" on domestic market share gains and solid September imports.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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