CSX (CSX) has a "meaningful" efficiency opportunity that could compound in the medium term, along with a volume growth pipeline, RBC Capital Markets said in a Monday note.

Under new CEO Steve Angel, the company is implementing a cost transformation, moving to data-driven asset management and more effective use of existing infrastructure anticipated to drive gains in efficiency, RBC analysts said. They noted that CSX is targeting free cash flow above historical levels and prioritizing return on invested capital.

On the commercial side, CSX is focusing on pricing supported by more industrial business development and truck-to-rail conversions, the analysts said. The company's more-than-100 industrial projects ramping across different industries and Howard Street Tunnel expansion position it well for sustained load growth, the analysts added.

Regulations are tightening truck capacity, which should create incremental conversion opportunities for CSX, but yield improvement in domestic intermodal rail will take time to appear in the results, according to the note.

RBC's rating on the company's stock is outperform with a price target of $47.

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