CSX reiterates FY outlook on Q1 beat; Goldman sees ‘solid upside potential’

Investing.com -- CSX reaffirmed its full-year outlook on Wednesday after first-quarter results topped analysts' estimates even as the railroad company experienced a drop in profit amid lower margins.

CSX Corporation (NASDAQ:CSX) shares gained roughly 3% in premarket trade following the report.

CSX reported earnings of $0.46 per share on revenue of $3.68 billion. Analysts polled by Investing.com anticipated EPS of $0.45 on revenue of $3.67B.

The beat on the bottom line comes even as operating margin fell 270  basis points to 36.8% in Q1 year-on-year. The company reported a 3% increase in volumes in the quarter compared with a year earlier.

Looking fiscal 2023, the railroad company continues to expect low single digit revenue and volume growth for the full year, with capex expected to be about $2.5 billion.

Commenting on the report, Goldman Sachs analysts reiterated a Buy rating on CSX, saying the company “and the rails more broadly could offer solid upside share price potential with a bit less volatility attached” despite a relatively choppy transport environment. 

The Wall Street giant noted a marginally lower ex-intermodal volume growth at the start of the second quarter Q2, in part due to the coal impact after the Baltimore Bridge collapse. 

Still, analysts said they expect “continued volume improvement as we move through 2024 and note solid intermodal volume growth at +7% YoY in the first two weeks of April, which supports our continued expectation for meaningful margin uplift in 2H24.”

(Yasin Ebrahim contributed reporting)