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  • J.P. Morgan sees downside risk for Joy Global [View news story]
    Sometimes you get the feeling that the banks are trying to depress the sector with all their damanging reports about future development of prices etc.
    Jul 2, 2014. 01:51 AM | Likes Like |Link to Comment
  • FedEx Heading Higher Despite Challenges [View article]
    FedEx would normally pass the cost of higher fuel prices on to customers through the fuel surcharge. Therefore an increase in oil price should not be a huge problem. A bigger problem is how to stop the trend that customers down trade from air to ground products. This is certain drag on margins. FedEx can to a certain extend off set this development by keep stealing market share from UPS on the ground. Good news for investors is that the pricing disciplin in the industry seems as strong as ever. UPS demonstrated this by following FedEx's lead on dim weight pricing on ground products. The perhaps biggest opportunity for FedEx is to increase its presence in Europe where they have been underperforming for decades. They will have to strenghten their ability to compete against especially DHL and to a certain extent UPS, although UPS seems to have lost traction in Europe over the last few years.
    Jun 29, 2014. 05:32 AM | 1 Like Like |Link to Comment
  • Europe Will Turn Into A Growth Driver For United Parcel Service [View article]
    The challenge for UPS in Europe is that DHL has been allowed to regain former strength and has a lot of tailwind from recent years improved results. DHL's better Network in Europe will make it difficult for UPS to take share. TNT will also be dangerous as they will concentrate on Europe after having abandoned adventures in other continents. On the other hand is FedEx not a real danger in Europe as little indicates that they will change their niche player strategy in this continent. UPS' recent acquisitions in Europe do not appear to be significant and will most likely not move growth numbers. Future growth from UPS will continue to come from the US market where the competitive situation is more favorable.
    Feb 22, 2014. 02:41 AM | 1 Like Like |Link to Comment
  • Earnings Coma: Digesting The Gains [View article]
    The problem is that you have nowhere to go if you sell stocks! The increase in shareprices has much more to do with low interest rate than improvement in companies and better prospects for the economy. As long as the interest rate stays low, stocks will most likely do fine.
    Jan 20, 2014. 02:10 AM | Likes Like |Link to Comment
  • How High Can U.S. Stocks Go This Year? [View article]
    It is a very nice article with some interesting stats. I am also increasingly worried about what raising interest rates will do to stock prices. Will a normalized interest rate level mean that PE Ratios will go back to historical average and drive a stock sell off? I guess this would be the logical conclusion.

    In terms of betting on Europe at this point, I am not so sure. Still huge challenges with current account deficits in Spain, Italy and France. If just one of these countries sees a worseing in the economy, it could mean that debt crises will come back. Furthermore some of the big banks like Santander and BBVA have bought mountains of government bonds using cheap ECB funding. This is a dangerous mix.
    Jan 4, 2014. 04:08 AM | 1 Like Like |Link to Comment
  • The Pricing Power Tell [View article]
    It has been exceptionally good for UPS and FDX shareholders that Airborne and DHL disappeared from the US domestic market. This has allowed for the above inflation rate increase you mention, increases that are even higher if you include new surcharges and changes to calculation of dim weight etc.

    One important note is that UPS and Fedex also are competing in markets where there is real competition such as freight, logistics, as well as many package delivery markets outside of the US.

    There is by the way an interesting lawsuit underway in Europe against the major container shipping lines. The EU commission is accusing the shipping lines of coordinating rate increases by signaling rate increases using for example press releases. It will be interesting to see where that will end, and if it will have implications for other industries.
    Nov 28, 2013. 12:15 PM | 1 Like Like |Link to Comment
  • Novo In Need Of A Booster Shot [View article]
    Novo's growth driver Victoza is furthermore under threat from Sanofi's new GLP 1 agonist, Lyxumia, that shows significant advantages over Victoza. Lyxumia was launched in Germany in March and has already reached 8% market share.
    Jul 8, 2013. 01:19 PM | Likes Like |Link to Comment
  • Comparing FedEx With United Parcel Service [View article]
    It will be interesting to see how the new trend of offering same day delivery options will impact the 2 companies. As far as I am aware none of the companies have an effective set up for same day delivery. E.g has Amazon, as a result of the change in sales tax strategy, chosen to open warehouses decentrally, which opens for the same day option.. If the trend is going towards same day deliveries managed from local warehouses, it could mean that local delivery companies, that are not in play for long distance deliveries, will be a larger part of the mix of e-tailers.
    Feb 22, 2013. 05:32 AM | Likes Like |Link to Comment
  • Can Anything Stop Novo Nordisk? [View article]
    Novo Nordisk has build the foundation of growth for years to come, in a market that just keeps growing. They have an impressive pipeline that may be the best in the business. However given the high valuation of the stock there are some risk for investors. If Tresiba is not approved in the US, it will be a disaster for the share price. Furthermore are several related mix products tied to Tresiba. I imagine the approval will come - despite the cardio vascular risk - but investors need to be aware of the risk of FDA rejecting it - or requesting a warning text on the label. In terms of Victoza, that already has been successfully launched, there are still concerncs about thyroid cancer. If those concerns grow, that could be a problem for Novo. In terms of pricing of the products, Novo has a big challenge. The share price is based on expectations to margin expansion. Novo has just announced that there long term EBIT margin goal is 40%. This goal can come back to haunt them at a later point. Even though they have good products, it may be difficult for them to hold the line on prices and at the same time keep growing. An interesting fact that I heard the Novo CFO mention is that Novo gets 3 times as much for their products in the US as in Europe. This is due to different negotiation models. However the end result is that the user of e.g. Victoza in the US have to pay up to 400 USD per month. Needless to say that will limit growth. I imagine that Novo at some point will have to compromise on their pricing policy (and thereby margins) in the US to secure further growth in their most important market.
    Feb 6, 2013. 01:42 AM | Likes Like |Link to Comment
  • UPS To Increase Its Dividend By 10% And Reduce Its Shares By 5% [View article]
    As long as the interest rates are low paying 3-4% dividend yield is a good way of keeping a stock floating. When interest rates at some point rise, UPS needs to find some real growth to keep investors from selling the stock.
    Feb 4, 2013. 03:45 PM | 1 Like Like |Link to Comment
  • UPS To Increase Its Dividend By 10% And Reduce Its Shares By 5% [View article]
    Didn't the teamsters force a strike that completely paralized the company for weeks about 15 years ago?
    Feb 4, 2013. 07:06 AM | Likes Like |Link to Comment
  • Novo Nordisk's CEO Discusses Q4 2012 Results - Earnings Call Transcript [View article]
    Anyone that have any thoughts on the risk of Tresiba not being approved by the FDA?
    Feb 1, 2013. 11:57 AM | Likes Like |Link to Comment
  • Novo Nordisk: Wait And Watch [View article]
    Novo Nordisk has undoubtedly hit a sweetspot with particularly Victoza. However, I would say there is risk in buying Novo Nordisk at these levels as many competitors are investing in bringing products into the market segments where Novo Nordisk dominate. Furthermore there are still people working to get Victoza pulled from the market due to side effects. If that happens the stock will fall like a stone.
    Jan 28, 2013. 02:41 AM | Likes Like |Link to Comment
  • The Delivery Battle: FedEx Or UPS For Your Portfolio? [View article]
    What is the best buy probably depends on investment objectives. If you want a nice dividend every year, UPS is the way to go. If you want to invest in a growing company, I think FedEx is the better option.

    UPS is becoming more and more of dividend focused company, similar to other companies that generate huge amount of cash, and have problems finding meaningful ways to invest them. As UPS is operating with very high profit margins, it is difficult for them to find ways to reinvest profits without undermining existing profit margins.
    It should be noted that UPS is a company that not has not seen any real growth in the number of packages organically in their home market over the last 5 years. If you compare UPS' current US volume with 2007, the numbers are very similar. Similar to companies in other industries, with a historically high market share, they have been more focused on defending margins than market share. Internationally there has been some package growth, but most of it has come from purchasing domestic delivery companies. Instead of being focused on growing number of packages, UPS has increased rates. In the US, I calculated that they have increased ground rates 12% (from approx 7,15 USD to approx 8,00 USD) over the last 5 years. The growth in rev pr package has given a decent profit growth, which has allowed them to increase the dividend from 1.68 USD in 2007 to 2.08 USD in 2011.

    Fedex is a different story. They still want to grow operations, and as a result they choose to invest most of their profits in the company and not in shareholder dividends. In the US they have stolen a lot of ground market share from UPS the last 5 years, enough to compensate for decline they have seen on air shipments. FedEx will probably keep on stealing market share from UPS in the US. The question is if they also can do better internationally. In Asia, they have been doing ok. However in Europe, they have consistently been underperforming and are still a small player with only a few % of the market. It will be interesting to see if FedEx can pick up some cheap bits of TNT's european network. At this point, to save the TNT deal, UPS should have offered FedEx some relatively insignificant countries in East Europe, which FedEx declined. If UPS is desperate to keep the TNT deal alive, they may come back with some more important fractions of the TNT business, which could improve FedEx's situation in Europe dramatically.
    Jan 10, 2013. 10:30 AM | Likes Like |Link to Comment
  • UPS will reportedly consider sharing its network with European rivals in order to save the stalled bid to acquire TNT Express. After company officials expressed early optimism over sailing over regulatory hurdles, the path has become trickier over time. [View news story]
    Difficult to believe it has come to this. With all the lawyers and lobby resources that UPS must have access to, they should not end in this situation. Sharing networks will allow smaller competitors to overcome the entry barriers that should protect the profit margins of UPS. Difficult to imagine this materializing.
    Nov 29, 2012. 05:38 AM | Likes Like |Link to Comment