Strong Execution Continues but Risk-Reward Bears Watching

Research evidence excerpt

Strong Execution Continues but Risk-Reward Bears Watching

Idea

July 23, 2026 01:50 AM GMT

Morgan Stanley & Co. LLCMCSX Corporation | North America Ravi Shanker

Equity Analyst

Strong Execution Continues but Ravi.Shanker@morganstanley.comMadison J Pasterchick +1 212 761-6350

Research Associate

Madison.Pasterchick@morganstanley.com +1 212 761-3787

Risk-Reward Bears Watching Nancy Hipp

Nancy.Hipp@morganstanley.com +1 212 761-1311

AlphaSignals Earnings Reaction

CSX Corporation (CSX.O, CSX US)

Unchanged Modest upside Modest revision higher

Freight Transportation | United States of America

Impact to our thesis Financial results versus consensus Direction of next 12-month

consensus EPS Stock Rating Underweight

Source: Company data, Morgan Stanley Research Industry View In-Line

Price target $32.00

Shr price, close (Jul 22, 2026) $49.93

CSX delivered a decent beat in 2Q and modestly raised Mkt cap, curr (mm) $93,519

guidance, driven by continued productivity traction. While 52-Week Range $51.29-31.80

execution remains strong, it is hard to tell how much

productivity and cycle we can extrapolate, esp. with valuation

looking stretched.

Key Takeaways

CSX’s EBIT came in +4%/+5% vs. cons./MSe (including $17 mm from real-estate

gains) as the quarter continued to showcase mgmt.'s chops on productivity

actions.

This has been characteristic of CSX’s Steve Angel era, for which he and the team

deserves credit.

However, though mgmt. is excited about the pipeline of actions, it is hard to know

how extrapolatable this is after years of PSRization.

We also believe the market may be underestimating a potential share shift back

to Truck and resource pressure, when demand shows up.

Cons numbers should come up slightly to reflect the raised guide though at ~20x