MORGAN KEEGAN UPS ESTIMATES, MAINTAINS MARKET PERFORM ON FEDEX
Morgan Keegan analyst Art Hatfield says FedEx (FDX) preannounced first quarter EPS of $1.23, up from its previous guidance range of $0.80-$1.00, with the results driven by lower-than-expected fuel prices at the end of the quarter combined with cost management. He notes, however, that management is maintaining its fiscal year 2009 (May) EPS guidance of $4.75-$5.25 as slowing economic growth is extending globally.
Hatfield raises $0.91 first quarter EPS estimate to $1.23, $1.09 for the second quarter to $1.17, and $4.85 for fiscal year 2009 to $5.25, at the high end of management's range. He maintains fiscal year 2010 EPS estimate of $6.26.
He believes the shares are fairly valued at current multiples given the economic environment and fuel price volatility.
UBS FINANCIAL UPGRADES NORFOLK SOUTHERN, BURLINGTON NORTHERN TO BUY FROM NEUTRAL
UBS Financial analyst Rick Paterson says railroad multiples have compressed along with the market last week and yesterday, which he thinks provides room for a 10%-plus bounce in the group, provided a trigger emerges.
Paterson believes the trigger will be particularly strong third quarter earnings season powered by falling fuel costs in the face of peaking fuel surcharge. He sees most rail companies beating expectations, some substantially; expects rail stocks to rally through reporting season.
For Norfolk Southern (NSC), he sees $1.26 third quarter EPS, better than the Street's $1.19 forecast.
For Burlington Northern (BNI), he raises third quarter EPS estimate to $1.75, higher than the $1.66 consensus and $1.60-$1.65 guidance: he sees $6.10 2008 EPS.
CITIGROUP CUTS GFI GROUP TO SELL FROM HOLD
Citigroup analyst Donald Fandetti says GFI Group (GFIG) terminated merger talks with Tullett Prebon (TLPR.L) as the companies failed to come to a mutually agreeable take-out price.
Fandetti says while his downgrade is concurrent with this announcement, his sell rating also reflects the weakening fundamentals at GFIG. He's concerned about the impact to GFIG's derivative volumes from hedge fund deleveraging and consolidation among the dealers.
He notes that while GFIG's customers are the dealers, it's the hedge funds that are the real engine of volumes in some of GFIG's key products. He adds that even the larger hedge funds are now starting to show signs of stress.
He cuts $12 price target to $7. He sees $0.88 2008 EPS.