Markets & Finance

Analyst Actions: UPS, FedEx, Texas Instruments


From Standard & Poor's Equity ResearchJP MORGAN DOWNGRAES UPS TO NEUTRAL FROM OVERWEIGHT

JPMorgan analyst Thomas Wadewitz says he's downgrading United Parcel Service (UPS) because the deterioration in express demand trends appear to be so sharp that the market weakness will overwhelm the benefit from DHL's withdrawal from the U.S. and the support for earnings from falling fuel prices.

Wadewitz notes that UPS has relatively outperformed other transports since the start of November, but he no longer sees compelling reasons to expect further relative performance.

He cuts his $3.40 2009 EPS estimate to $3.00; he sees $3.57 for 2008.

MORGAN KEEGAN MAINTAINS MARKET PERFORM ON FEDEX

Morgan Keegan analyst Art Hatfield says FedEx (FDX) pre-released second quarter EPS of $1.58, at high end of the company's previous $1.40-$1.60 guidance range and above his $1.50 estimate and Street's $1.54 consensus.

But Hatfield notes that FDX cut guidance for fiscal year 2009 (May) to $3.50-$4.75 from $4.75-$5.25, citing significantly weaker macroeconomic conditions, weakening demand offsetting potential benefits from lower fuel prices and DHL exiting the U.S. domestic package market.

He raises $1.50 second quarter EPS estimate to $1.58, but cuts $1.16 third quarter to $0.40, $1.36 fourth quarter to $0.79, $5.00 fiscal year 2009 to $4.00 and $6.26 fiscal year 2010 to $5.00.

NEEDHAM CUTS ESTIMATES, BUT KEEPS BUY ON TEXAS INSTRUMENTS

Needham analyst N. Quinn Bolton says Texas Instruments (TXN) cut fourth quarter guidance on broad-based deterioration of demand across its product portfolio, led by wireless and catalog products sold via distribution.

Bolton notes new revenue view implies 29% quarter-to-quarter drop at mid-point; also, TXN sees first quarter down quarter-to-quarter, albeit not at level of the fourth quarter.

He says, despite its poor revenue view, he's encouraged TXN is reducing inventory levels and is taking steps to cut costs.

The analyst reduces his $0.26 fourth quarter EPS estimate to $0.10 EPS and $0.17 first quarter EPS to $0.05 loss. He sets a new $17 price target, but maintains buy.


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