The Transport Stock Downgraded After CEO Death

CSX stock appears ready to continue Friday's fall

by Karee Venema

Published on Dec 18, 2017 at 9:30 AM
Updated on Dec 18, 2017 at 11:25 AM

Shares of CSX Corporation (NASDAQ:CSX) slumped 7.6% to settle at $52.93 on Friday following news the transportation company's CEO Hunter Harrison would take a medical leave. After Harrison's unexpected death over the weekend, CSX shares are down 1.9% in electronic trading -- set to test a key technical trendline again today.

Specifically, CSX is poised to touch its 180-day moving average today -- a trendline that emerged as a floor on Friday. And while the shares spent a short stretch trading below here in November, it's been ushering the stock higher since July 2016. Despite these recent technical and fundamental hurdles, CSX shares are still up 47.3% year-to-date, and hit a record high of $58.35 last Wednesday, Dec. 13.

And while sentiment toward the transport stock has been mostly upbeat, analysts are starting to change their tune among the recent uncertainty. This morning, for instance, TD Securities downgraded CSX to "hold" from "buy" and lowered its price target to $54 from $63 -- though this still stands at a slight premium to current trading levels.

Looking to the options pits, the January 2018 50-strike put is home to peak open interest of 19,448 contracts. Data from the major options exchanges confirms significant sell-to-open activity here in early October when CSX stock was trading north of $52, meaning the put writer expects the shares to stay north of the half-century mark through January options expiration. The equity has only finished one week below this level just once since early September.

Editor's note: an earlier version of this article referred to CSX as an "oil stock." We regret the error.

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