RBC upgrades CSX, says Union Pacific-Norfolk Southern bodes well for the

CSX could be positioned to grow in the event that Union Pacific’s takeover of Norfolk Southern gets approved, RBC Capital Markets said on Thursday. The firm upgraded the rail transportation giant to outperform from sector perform and upped its price target to $39 from $37, implying around 19% upside from Wednesday’s close. The move comes weeks after Union Pacific announced the acquisition of rival Norfolk Southern in a deal valued at $85 billion. Analyst Walter Spracklin thinks the transaction will close in early 2027 if it’s approved. Such a move could bolster CSX’s own acquisition prospects, Spracklin said. “The potential approval of the UNP/NSC deal will give a potential acquirer of CSX much more certainty related to the regulatory process and increases the likelihood a potential acquirer reconsiders their position at that time (either of BNSF, CPKC or CN),” he wrote in a note to clients. CSX .SPX YTD mountain CSX vs. S & P 500, year-to-date But even if the deal isn’t approved, Spracklin remains optimistic about the stock, seeing its risk-reward profile as skewing “positive.” He pointed to improving operations within the company as a reason for his continued enthusiasm. “Operations have improved meaningfully in recent months despite the company still working through ongoing construction on the Howard Street Tunnel and the Blue Ridge projects – both of which are currently constraining CSX’s network and which we expect to further improve fluidity when complete over the coming months,” he added. Spracklin’s call puts him in the majority among analysts covering the stock. LSEG data shows 18 of 28 analysts have a strong buy or buy rating. The remaining 10 analysts have a hold equivalent rating. The stock rose around 1% in premarket trading Thursday following the upgrade. Shares have fallen about 9% in the last month and they’re only up more than 1% on the year, lagging the S & P 500 in both time frames.