01:38 PM EDT, 08/06/2024 (MT Newswires) -- CSX (CSX) expects a stable second half of the year even though market conditions remain mixed, UBS said in a note emailed Tuesday.

The rail freight company reported Q2 EPS of $0.49, beating estimates of $0.48, with a 2.1% volume increase and a 3.6% rise in merchandise yields. Operating expenses of $2.25 billion were $22 million below expectations, despite a $16 million accounting adjustment for engineering work, UBS said. "The impact of the adjustment was not reflected in our model and this reflects CSX's strong cost side execution in [Q2]."

Looking ahead, CSX expects continued support from chemicals, forest products and minerals volume in H2, but faces uncertainty due to a potential labor strike at East Coast ports. Metals and fertilizer volume will likely remain weak in H2, while auto volumes have already softened.

UBS lowered EPS forecast to $0.48 from $0.49 for Q3 and to $0.50 from $0.51 for Q4, citing weaker revenue per car. It reiterated buy rating on CSX and adjusted price target to $42 from $44.

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