CSX Shares Slide as Q4 Revenues Fall Short, Operational Issues Impact Results

CSX Corporation (CSX) shares took a tumble on Friday, January 24, after the company reported disappointing fourth-quarter revenues. The railroad operator's stock price declined by 2.88% to $32.70 at the time of publication, as investors digested the news and analyst commentary. CSX's quarterly results were marked by several operational issues that impacted the company's financial performance.

CSX reported fourth-quarter revenues of around $3.54 billion, down 3.8% year-over-year, despite a 1% higher volume, robust pricing in the merchandise segment, and stable pricing in intermodal. The company's adjusted earnings of 42 cents per share came in-line with expectations but included a tax benefit of $26 million, or 1.5 cents per share, which was not factored into analyst estimates. CSX's adjusted operating income of $1.21 billion for the quarter was down from $1.32 billion in the prior year period.

Analysts weighed in on CSX's performance, with some maintaining their ratings while reducing their price targets due to the impact of transitory items, operational issues, and lower commodity prices on the company's near-term outlook. BMO Capital Markets' Fadi Chamoun reiterated an Outperform rating but reduced the price target from $40 to $38. He highlighted that CSX's adjusted earnings were impacted by lower fuel revenues, unfavorable mix, lower coal commodity prices, and the impact of hurricanes. RBC Capital Markets' Walter Spracklin maintained a Sector Perform rating and cut the price target from $34 to $33. He noted that CSX's results were impacted by several operational issues, including lower export coal benchmarks, fuel prices, and costs related to major construction projects on the Howard Street Tunnel and Blue Ridge Subdivision. Raymond James' Patrick Tyler Brown reaffirmed an Outperform rating but reduced the price target from $38 to $37. He stated that CSX's full-year earnings were impacted by higher costs, and 2025 is expected to have serious hurdles outside management's control. Stephens' Daniel Imbro maintained an Overweight rating and a price target of $38. He mentioned that some downward revision in estimates was expected due to headwinds in the first half of 2025, but management commentary suggests that numbers need to come down further than expected. Stifel's Benjamin Nolan reiterated a Buy rating and a price target of $37. He stated that CSX is gearing up for several challenges in the first half of 2025, including an unfavorable impact of $300 million from lower export coal benchmark pricing and fuel prices, and $10 million per month of operating income loss from construction projects on the Howard Street Tunnel and Blue Ridge Subdivision.

CSX's adjusted operating margin remained industry-competitive at 34.3%, down from historical levels. The company's focus on network investment and efficiency improvements positions it well for potential volume recovery in the future. However, sustained pressure on coal revenues and fuel surcharges may continue to impact top-line performance.

In conclusion, CSX's Q4 revenues fell short of analyst expectations, and operational issues impacted the company's financial performance. While some analysts maintained their ratings, most reduced their price targets due to the impact of transitory items, operational issues, and lower commodity prices on the company's near-term outlook. Despite the challenges, CSX's adjusted operating margin remained competitive, and the company's focus on network investment and efficiency improvements positions it well for future growth.