Target price seen as high as $40! Wells Fargo & Company: CSX (CSX.US) alliance with Buffett's BNSF will help performance outperform peers.

Wells Fargo & Company stated that the intermodal cooperation agreement reached between CSX Corporation (CSX.US) and Burlington Northern Santa Fe Transportation Company (BNSF) is expected to divert the volume of goods that would originally have been transferred by Norfolk Southern (NSC.US) to the CSX network. It is worth noting that BNSF, which has been acquired by Warren Buffett's Berkshire Hathaway since 2009, has undoubtedly increased market attention to the potential of cooperation through the "Buffett concept." This cooperation will "lay the foundation" for CSX and is expected to outperform its non-allied peers in terms of performance. In a report, Wells Fargo & Company pointed out that as CSX gradually overcomes the challenges of operating its rail network, alleviates downward pressure on its coal business, and boosts development through cooperation with BNSF, it is expected to achieve robust profit growth by 2026. Based on this assessment, Wells Fargo & Company raised its rating of CSX from "neutral" to "buy" and raised its target price by 8% to $40 per share. Analyst Christian Wetherbee said, "We believe that the commercial cooperation between BNSF and CSX has begun to drive intercontinental intermodal business towards CSX, which previously needed to be handed over to Norfolk Southern. He further added that this cooperation involves transportation company JB Hunt Carriage Services Inc. in the eastern region, accounting for 35% of their transportation expenditures, with a scale of $1 billion. In August of this year, CSX and BNSF signed an agreement to expand their intermodal partnership. Under this agreement, they will launch a new JB Hunt Carriage Services Inc. between Phoenix, Arizona, and Atlanta, Georgia, aiming to convert highway freight business to rail transportation. They will also introduce a new international intermodal service connecting New York-New Jersey Port, Norfolk, Virginia, and Kansas City. This cooperation comes at a time when there are speculations in the market that the two companies may merge to counter the transcontinental routes of the soon-to-be completed merger of Union Pacific (UNP.US) and Norfolk Southern. Even though BNSF executives have stated multiple times that they have not engaged in negotiations with CSX regarding a merger, Wetherbee believes that if the merger of Union Pacific and Norfolk Southern is ultimately approved, the current competitive landscape may force further industry consolidation, and there may be a possibility for deeper cooperation between CSX and BNSF. To reflect CSX's "industry-leading growth potential", Wetherbee raised his financial expectations for the company: the earnings per share forecast for 2025 was raised from $1.63 to $1.65, and for 2026, it was raised from $1.80 to $1.90; on the revenue side, the forecast for 2025 was raised by 0.4% to $14.18 billion, and for 2026, it was raised by 1.8% to $14.78 billion.