J.P. Morgan Lowers Con-Way Rating To Neutral; PT Drops To $34

J.P. Morgan is lowering its rating on Con-Way, Inc. (NYSE: CNW) from Neutral to Underweight “because we believe that cost pressures in 2011 are a meaningful risk to the strong margin improvement and EPS growth expectations we believe are reflected in the stock.”

“While the LTL pricing story does appear to be improving, we suspect that the move up in pricing probably will not be sufficient to drive the EPS growth required to drive upside for the stock,” J.P. Morgan writes. “While our new price target implies only modest downside, we suspect that potential EPS disappointment in 4Q could cause a more material move down in the near term.

“We are lowering our December 2011 price target from $39 to $34 driven by a reduction in our 2012 EPS estimate from $3.00/share to $2.45/share. In order to derive our new price target we are using a slightly higher P/E of 14x relative to our prior target multiple of 13x.”

Con-Way closed Tuesday at $35.65.