What Hunter Harrison's Passing Means for CSX

We reduced our fair value estimate Friday to $51 from $54 as we incorporated slower operating ratio improvement than we assumed prior to the announcement of his medical leave. We maintain this updated fair value estimate, but we expect the market to punish shares even more severely than Friday's 7.6% decline. Were shares to decline to the $45 range (4 stars), we would consider this a buying opportunity.

Two months ago CSX hired James Foote, 63, as COO, and we expect the board will rely on Foote to continue implementation of the precision railroading model; this may include promotion to CEO. Foote led

On a call Friday, Foote indicated he believed Harrison already accomplished much of the heavy lifting in closing and repurposing yards and facilities, as well as in beginning to transform the intermodal strategy away from unit trains and a hub-and-spoke model. We would not be surprised to see Foote bring on board additional operations personnel who intimately understand Harrison's proven operating model.

In our view, Harrison's longtime operations understudy, Keith Creel, now CEO of

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