Analyst starts coverage of FedEx and UPS, says FedEx shares have more room to grow
By APTuesday, August 18, 2009
Sector Snap: Analyst starts coverage of FedEx, UPS
NEW YORK — An RBC Capital Markets analyst initiated coverage on the world’s two largest package delivery carriers on Tuesday, saying that FedEx Corp. shares might grow more as the economy begins to recover.
While FedEx’s margins and earnings have “clearly been under pressure,” John Barnes offered an “Outperform” rating for FedEx, saying he expects FedEx will continue to move out ahead of its peers when the stock market chugs higher.
Barnes said he is concerned about the effects of a long and drawn-out recovery, but FedEx will likely be able to adjust to changing economic conditions better than other companies.
He set his rating on FedEx’s larger rival, UPS Inc., at “Sector Perform.”
“Given that we do not believe a recovery is eminent, we are concerned that UPS will generate several more quarters of lackluster earnings results,” he wrote in a note to clients.
Barnes noted that because the stock has lagged the broader market so far this year, he doesn’t think a lower rating is needed considering the company’s strong market position and financial status.
