Q2 Preview for the Class 1 Railroads

研报英文原文证据摘录

Q2 Preview for the Class 1 Railroads

perating leverage. We therefore could see management

raise EPS guidance to MSD, which we believe would be well received. Price target increases to $195

(from $178) on the back of our higher multiple of 22x (from 20x).

• CPKC – Q2 estimate unchanged and in line with consensus; price target increases to $139 (from

$127); maintain Outperform. Our Q2 estimate remains at $1.24 (cons. $1.24) reflecting strong

operating metrics and in line volumes, offset by several derailments and increased SBC. Our 2026 EPS

growth estimate of +11% (unchanged) aligns with guidance for EPS up LDD and compares to consensus

+11.5%. Key focus on the call will be the extent to which CP specific opportunities can offset continued

Coal headwinds. Price target to $139 (from $127) resulting from our higher target multiple of 23.5x

(from 21.5x) applied to our unchanged 2027E of $5.91 (cons. $5.90).

• CSX – Q2 estimate unchanged and above consensus; price target increases to $51 (from $47);

maintain Outperform. Our Q2 estimate remains at $0.51, above consensus $0.49, as we expect better

volume to be offset by higher incentive compensation. Our 2026 revenue growth estimate of +5.7% is

in line with guidance for up MSD (and ahead of consensus +5.1%) reflecting the expected impact from

higher fuel surcharge revenue, in addition to volumes coming in ahead of expectations. Furthermore,

our 2026 margin improvement estimate of 290bps aligns with guidance for improvement toward the

high end of 200-300bps. Our 2026 estimate of $1.90 (unchanged) is a touch below consensus $1.92

and our 2027 estimate moves higher to $2.17 (from $2.11), in line with consensus $2.17, on the back

of increased expected volumes reflecting a strong industrial pipeline. Price target to $51 (from $47)