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The Zacks Analyst Blog Highlights: United Parcel Service Inc, FedEx Corporation, U.S. Bancorp, Mitsubishi UFJ Financial Group Inc and UMB Financial Corp.

UPS FDX USB MTU UMBF

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For Immediate Release

Chicago, IL – November 15, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include United Parcel Service, Inc (UPS - Analyst Report), FedEx Corporation (FDX - Analyst Report), U.S. Bancorp (USB - Analyst Report), Mitsubishi UFJ Financial Group Inc (MTU - Analyst Report) and UMB Financial Corp (UMBF - Snapshot Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Four daily picks are offered free.

Here are highlights from Thursday’s Analyst Blog:

UPS Adds Cloud Technology

World’s largest freight forwarding company, United Parcel Service, Inc. (UPS - Analyst Report) is upgrading its supplier management services by introducing UPS Order Watch. The new addition is a cloud based technology that will facilitate the inbound supply chain of its customers.

The new Order Watch technological platform, currently available to existing customers, will be offered to new customers in 2013 as well. 

UPS’ supplier management service is a product of its international ocean and air freight forwarding business. The introduction of cloud based technology to this service would add to the service quality, thereby attracting more new customers.

The Order Watch platform aims at enhancing efficiency in terms of timeliness, accuracy alongside improving processing and management of suppliers. We are also hopeful that the introduction of this cloud based technology would remain accretive in stimulating the otherwise down international freight business of UPS given current macro economic factors.

The company in its previous reports had already indicated a slowdown in manufacturing business in Asia. UPS now apprehends a downtrend in manufacturing orders due to lower exports in China.

Apart from international business, UPS expects U.S. Domestic Package revenue to grow in the range of 1%–2%, down from its previous projection of mid single-digit growth. The company even expects U.S. Domestic Package average daily volume growth to moderate due to unfavorable macroeconomic factors.

It also expects a lackluster volume growth in premium and B2B products as customers are seeking more cost effective logistics solutions. Consequently, the company has set a conservative earnings target ranging between $4.55 and $4.65 for 2012, which is substantially lower than its previously projected targets. The current Zacks Consensus Estimate for 2012 is pegged at $4.58; concurrent with the company’s range of estimates.

However, we believe over the long term the company will continue to invest in technology and network enhancements that would provide a competitive edge over its peers like FedEx Corporation (FDX - Analyst Report). Its integrated sales approach also promises future growth, given its industry-leading margins and financial strength. The company is also seeking capacity adjustment by reducing Asian air networks to improve cost structure.  Further, its focus on continued productivity gains, improved operating profit, and strengthening liquidity position  amidst  economic challenges also is encouraging.

We have a long-term Neutral recommendation on UPS and FedEx. Both these stocks retains a Zacks #3 Rank, implying a short-term (1-3 months) Hold rating.

 

U.S. Bancorp Unit Buying AIS

 

In an effort to augment its securities services business, U.S. Bancorp’s (USB - Analyst Report) subsidiary - U.S. Bancorp Fund Services, LLC – is acquiring AIS Fund Administration (“AIS”), which offers fund administration and related services to alternative investment managers.

The deal leads to the addition of about $25 billion in hedge fund assets under administration to the U.S. Bancorp subsidiary. Along with AIS’s assets, its staff consisting of 176 members at its offices in New Jersey, the United Kingdom and the Cayman Islands, will also be integrated into U.S. Bancorp Fund Services.

Following this deal, $50 billion in alternative investment assets would be serviced by this U.S. Bancorp unit. However, the terms of the deal were not made public and the transaction is subject to regulatory approval.

Our Take

We are encouraged with this deal as it would help the company augment its fund servicing capacities and assist it to increase focus on corporate trust services.

As a matter of fact, U.S. Bancorp has a well-balanced business model, with non-interest revenue representing nearly half of its total revenue. Its results have been driven by a combination of acquisitions and organic growth.

In addition to strengthening its existing fee-based operations to generate long-term revenue growth, U.S. Bancorp announced several payment and trust-related acquisitions during the past year. This included a portfolio of approximately $700 million of credit card assets, the institutional trust business of Union Bank, a unit of UnionBanCal Corporation of San Francisco. Notably, UnionBanCal is a subsidiary of Mitsubishi UFJ Financial Group Inc. (MTU - Analyst Report).

Further, it comprises the Indiana corporate trust business of UMB Bank N.A. , a unit of UMB Financial Corp. (UMBF - Snapshot Report). Going forward, the company expects additional opportunities in payments and corporate trust in the coming years.

In total, during the downturn, the company acquired over $3.2 billion in card assets and $1.1 trillion in trust assets under administration. This diversification in business is expected to continue to help maintain growth in an otherwise unfavorable operating environment.  

U.S. Bancorp currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. Considering the fundamentals, we maintain a long-term Neutral recommendation on the stock.

 

Today, Zacks is promoting its ''Buy'' stock recommendations. Four daily picks are offered free.

 

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