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JP Morgan Downgrades Arkansas Best to 'Underweight'

JP Morgan downgraded Arkansas Best (ABFS) to "underweight," from "overweight."

Analyst Gregory Burns downgraded the trucking company on the view that it may be losing market share to non-union competitors Overnite and Old Dominion Freight. He notes the company's fourth-quarter earnings per share was below his 58 cents estimate, as tonnage growth was lighter-than-expected -- leading to a revenue increase of just 1.5%, vs. his 7.8% estimate.

Burns cut the $2.80 2004 earnings per share estimate to $2.40, and cut the $3.15 2005 estimat to $2.80. He cited lower tonnage, lower revenue assumptions, and a more modest improvement in operating ratio. Given the fixed cost leverage in the less-than-truckload model, Burns says he's concerned that Arkansas Best may not be fully participating in a cyclical revenue upturn.

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