Tuesday, June 23, 2009

Early Morning Tidbits: FDX, PKI

- JP Morgan is upgrading Fedex (NYSE:FDX) to Overweight from Neutral and raising their target to $66 (prev. $60).

Firm says they are upgrading FDX to Overweight from Neutral because its strong operating leverage should drive performance for the stock when there is improvement in the economy, and they believe that the bad news regarding current pressures is now reflected in the stock. In JPM`s view, EPS estimates have finally come down sufficiently that current Consensus expectations are realistic, and they expect F2010 to clearly mark a bottom. They expect gradual improvement in transport demand data points to drive upside for the stock while the potential bankruptcy of a large LTL competitor provides another possible catalyst.

Notablecalls: Essentially a nice call from JPM. They downgraded the name back in January saving their clients from a lot of heartache. The stock didn´t go down a whole lot on the pretty dismal guidance issued last week so it`s ready to move up? Maybe.

I see the stock trading around $51.50-52 range today.

- Barclays is putting it rather blunt with PerkinElmer (NYSE:PKI):

They are downgrading PerkinElmer (PKI) from Equal Weight to Underweight on unfavorable risk-reward compared to peers. Despite the stock's significant year-to-date rally (up 24% vs. S&P500 +1%), there remains significant uncertainty around the company's end markets. Relative to peers, the firm believes the company has more industrial exposure, lacks differentiated technologies, and has significantly lower operating margins, meaning its growth prospects are less than peers and fewer dollars will likely flow to the bottom line once growth does resume.

Furthermore, downside risk to numbers remains. In the analyst`s view, the stock has gotten ahead of itself, now more than what they would consider to be fundamental fair value. Firm would advise investors to look elsewhere for more attractive risk-reward profiles in companies with differentiated technologies and higher margins.

Notablecalls: This one will likely get hit following the call. Sub-$17 anyone?

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