CSX Corporation (NASDAQ: CSX) said Tuesday afternoon CFO and executive vice president Frank Lonegro will leave the company after 19 years of service. The announcement could be seen as surprising in some ways and in other ways not so, according to Morgan Stanley.
Morgan Stanley's Ravi Shanker maintains an Underweight rating on CSX's stock with an unchanged $57 price target.
CSX offered "very few details" relating to Lonegro's departure, but it was made clear it's not due to any disagreements over financial direction, policy or accounting concerns, Shanker wrote in a note. As CFO, the executive deserves credit for overseeing CSX's precision railroading (PSR) implementation over the past two years, which resulted in stock price gains.
On the other hand, Lonegro could be seen as the "last remaining member" of the pre-Hunter Harrison management team, and his departure is merely a function of him staying on board longer than other executives.
Nevertheless, Lonegro's departure comes at an "interesting time" for the company as it focuses on moving beyond PSR cost-cutting and focuses on growth, the Shanker wrote. This is likely to be difficult to achieve given cyclical and secular headwinds.
CSX's stock closed lower by 0.7 percent Wednesday at $73.95 per share.
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