FedEx "equal weight," target price reduced - update

19.06.08 - Lehman Brothers

NEW YORK, June 19 (newratings.com) - Analyst Gary Chase of Lehman Brothers maintains his "equal weight" rating on FedEx Corp (FDX), while reducing his estimates for the company. The target price has been reduced from $106 to $96.

In a research note published this morning, the analyst mentions that the company has posted its EPS for the latest quarter in-line with expectations. FedEx has reduced its annual EPS guidance, adjusted for fuel charges, to $4.90-$5.40. The company?s Express division is expected to report mid-to-high single-digit declines in domestic volumes, similar to the levels seen in the last downturn, the analyst says. The division is also likely to experience flattening of growth in the international markets, resulting in margin contractions at levels greater than the ones seen in recent downturns, Lehman Brothers adds. The EPS estimates for FY08 and FY09 have been reduced from $5.86 to $5.85 and from $6.00 to $4.85, respectively.