FedEx Corp.: Goldmn Sachs equity analyst Scott Malat maintained a neutral rating on shares of FedEx Corp. (FDX) on Mar. 18.
FedEx shares fell in New York trading on Mar. 18 after the world's largest cargo airline reported quarterly results that rose less than expected. Net income for the three months ended Feb. 28 rose to $239 million, or 76 cents a share. The company was projected to earn 73 cents a share, the average of 18 estimates compiled by Bloomberg. At least five analysts said in the past two weeks that FedEx may exceed their estimates or the Wall Street consensus.
Revenue gained 6.9% to $8.7 billion, which exceeded the $8.4 billion estimated by analysts. Profit in the year-earlier quarter was $97 million, or 31 cents. FedEx said earnings for the full fiscal year would be as much as $3.80 a share, up from previous guidance of as much as $3.75. Profit in the current quarter will be $1.17 to $1.37 a share, FedEx said. Analysts had projected $1.25, based on the average of 18 estimates.
Malat said in a note that the company's third-quarter EPS of 76 was above his forecast of 75 cents. He noted that "strong" results in the company's express and ground delivery units were offset by weak margins in its less-than-truckload trucking segment. He said management fourth-quarter EPS guidance compared with his forecast of $1.35.
"In addition, management noted compensation costs would likely pressure 2011 EPS," the analyst wrote.
Burger King Holdings Inc.: Deutsche Bank equity analyst Jason West raised a recommendation on shares of Burger King Holdings Inc. (BKC) to buy from hold on Mar. 18.
In a note, West said that shares of the second-largest U.S. hamburger seller have underperformed the market by around 60% over the past year. "While the stock has bounced a bit recently, we see room for further upside from here as sales and margins remain well below cyclical peaks and as investors may begin to seek out cheaper names that can still benefit from a recovering economy," he said.
"While management still has work to do to rebuild credibility, we see several positives emerging in the BKC story", West wrote, including signs of a bottom in sales trends; easing same-store sales comparisons; an improving macro-economic backdrop; and the company's renewed focus on its breakfast menu, planned for later in 2010.
West also noted as positives for Burger King increased M&A activity in the restaurant sector; a "thawing" in relations with the company's franchisees; a "compelling" stock valuation; and "still-negative [Wall] Street sentiment ... leaving plenty of room for more constructive views".
The analyst lowered his EPS estimates for the third quarter to 29 cents from 32 cents; for fiscal 2010 (ending June) to $1.32 from $1.37; and for fiscal 2011 to $1.50 from $1.55.
West raised a price target on the shares to $24 from $19.
Nasdaq OMX Group Inc.: JMP Securities initiated coverage of NASDAQ OMX Group Inc. (NDAQ) on Mar. 18 with a market outperform rating and a 12-month price target of $25.
In a note, equity analyst David Scharf said he believes shares of the global exchange company represent a "compelling risk/reward trade-off based on multiple new product initiatives, a more stable revenue model than other cash equities-driven businesses, and improving market share and/or volume trends".
Scharf said he has recently seen a rebound in Nasdaq's U.S. cash equities market share, an expanding U.S. options market share over the past year, improving European operations, early successes with new equities and clearing services, and "solid" expense management. "Yet [the] shares are trading near their 52-week lows as overall market volume headwinds, some regulatory uncertainty, and a weak capital markets calendar overhang the story," he wrote.
The analyst expects Nasdaq's EPS to grow 9% in 2010 and 11% in 2011, "driven by the company's multiple growth initiatives, recovery from trough volumes, and operating leverage".
Sirius XM Radio Inc.: Standard & Poor's equity analysts Tuna Amobi and Erik Kolb maintained a hold opinion on shares of Sirius XM Radio Inc. (SIRI) on Mar. 18.
The analysts said in a posting on the S&P MarketScope service that Srius, the only U.S. satellite radio broadcaster, announced that it has received a second notice from NASDAQ that it has not regained compliance with the $1.00 minimum closing bid requirement for its common shares; Sirius said it will request a hearing at which it will ask for continued listing pending its return to compliance. The Sirius board has approved a reverse stock split, the analysts noted.
"[With a current market cap of nearly $3.5 billion, we think Sirius has ample options to regain compliance," the analysts wrote. "Separately, we remain encouraged after Q4 results and expect SIRI to realize additional merger-related synergies as it renegotiates several contracts".