CSX & Pan Am Deal Moves Past STB Hurdle

CSX Corp. (NASDAQ: CSX) disclosed that it has bagged the approval from the Surface Transportation Board (STB) to acquire Pan Am Railways, Inc. The deal which was announced in November 2020, is expected to close on June 1, 2022.

CSX provides rail-based freight transportation services, which includes traditional rail services and transportation of intermodal containers and trailers. Meanwhile, Pan Am is a regional freight railroad network that covers most of northern New England.

The deal is expected to strength CSX’s presence in Connecticut, New York and Massachusetts and add Vermont, New Hampshire and Maine to its existing network.

Executive Comments

The President and CEO of CSX, James M. Foote, said, “CSX is pleased that the STB approved the proposed acquisition of Pan Am and has recognized the significant benefits this transaction will bring to shippers and other New England stakeholders.”

The President of Pan Am, David A. Fink, said, “This much anticipated decision paves the way for an exciting new chapter for Pan Am customers and our employees as we begin our transition to the CSX team.”

Stock Rating

On April 8, Bank of America Securities analyst Ken Hoexter reiterated a Buy rating on CSX and raised the price target to $38 from $35. The new price target implies 8.4% upside potential from current levels.

The rest of the Street is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 11 Buys and two Holds. CSX’s average price forecast of $38.86 implies 10.8% upside potential to current levels.

Hedge fund Trading Activity

TipRanks’ Hedge Fund Trading Activity tool shows that confidence of hedge funds in CSX is currently Very Negative, as the cumulative change in holdings across all 18 hedge funds that were active in the last quarter was a decrease of 23.5 million shares.

Takeaway

Shares of CSX have gained 7.7% over the past year. Further, the company’s performance is likely to get a boost from the recent acquisition.

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