UPS shares haven’t changed after analyst downgrade
UPS Inc. shares were little changed after an analyst downgraded the company’s stock, saying it’s too expensive given the extent of the downturn in the economy.
UPS Inc. shares were little changed Wednesday after an analyst downgraded the company’s stock, saying it’s too expensive given the extent of the downturn in the economy.
Morgan Stanley analyst William Greene said substantial earnings risk remains for the world’s largest shipping carrier. He said his firm was downgrading UPS stock to “Underweight” from “Equal-weight.”
“We’ve noted that UPS estimates are too high for some time, but even we are surprised by the lack of earnings revisions heading into fourth quarter 2008 given deteriorating macro trends and poor FedEx guidance,” Greene wrote in a research note. “The market is overestimating the benefit from DHL’s exit and UPS cost initiatives.”
Analysts polled by Thomson Reuters expect UPS to post a profit of $3.54 in 2008 and $3.34 in 2009. Greene suggested Wall Street’s 2009 profit forecast – which assumes a 5 percent decline – was overly optimistic, and ignored recent trends.
He cut his 2008 estimate to $3.65 per share from a prior view of $3.72 per share, and shaved his 2009 estimate to $2.75 per share from $3.05.
Atlanta-based UPS, also known as United Parcel Service, is scheduled to report its fourth quarter and full-year 2008 results on Feb. 3.
