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Auto & Transport Roundup: Market Talk

23 Sep 2017 8:20 am

The latest Market Talks covering the Auto and Transport sector. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

1413 GMT - Used-car retailer CarMax saw sales increase nearly 10% to $4.4B and sales of used cars rose 11% despite a decrease in store traffic in 2Q. Bill Nash, president and CEO of the retailer, attributes the increase to enhancements to the website. "9 out of 10 customers start the [car buying] process online," he says. CarMax saw a 17% increase in website traffic last quarter. The retailer is investing in offerings such as online appraisal, which it plans to expand to some stores in the Midwest, and home delivery of vehicles. (adrienne.roberts@wsj.com; @AdrRoberts)

1352 GMT - FedEx management continues to shrug off e-commerce, writes Morgan Stanley. While executives in the past have said it's just 15% of revenues, they've now gone further, emphasizing their international business and saying e-commerce is unlikely to become a bigger piece of total retail soon. "We don't necessarily disagree but note that this is an unusually conservative view of what many bullish investors would consider the prime growth story at FDX," Morgan Stanley adds. The looming threat of Amazon has hit both FedEx and United Parcel Service stocks over the past years as the online retailer builds out its own delivery network, one day intending to compete. (laura.stevens@wsj.com; @laurastevenswsj)

1341 GMT - Amazon is changing everything, quickly, writes Morgan Stanley. So fast, in fact, that FedEx's unchanged targets for its Express business give them pause. That's because "in a world where AMZN owns brick-and-mortar stores, and is asking customers to pick up orders themselves and return through Kohl's stores (could anyone have imagined that even 18 months ago?), 2020 is a long way off, in our view," they write. The analysts remain equal weight on FDX, in part due to the likelihood AMZN will keep delivering more of its own packages. (laura.stevens@wsj.com, @laurastevenswsj)

1239 GMT - Lufthansa shares are up slightly midday, supported by news that Air Berlin selected it as one of two bidders for its air transport unit. "Everything points to the fact that Lufthansa's desired scenario is coming true," says a trader. Lufthansa's patience is paying off, as getting the bulk of Air Berlin's fleet for a good price will bring growth without great effort. Low-cost airline easyJet is also in talks with Air Berlin, but it is expected to only get smaller parts. Lufthansa shares trade 0.5% higher at EUR22.80, while Air Berlin's trade 10% higher at EUR0.50. (marc.navarrogonzalez@dowjones.com)

0926 GMT - Siemens's apparent pivot to Alstom as a potential partner for its rail business, after months of talks with Bombardier, could be good for both Siemens and Alstom, according to Bankinter. The bank says Alstom's 2016 earnings of EUR7.3 billion make it a better fit for Siemens, whose transport division took in EUR7.8 billion last year, compared with Bombardier's EUR6.6 billion. However, if talks stall and Siemens reverts back to its Bombardier plan, Alstom will have to make some acquisitions of its own in order to grow its balance sheet and be able to compete. Siemens down 0.2% at EUR116.65. Alstom up 0.1% at EUR31.75.(nathan.allen@dowjones.com)

0907 GMT - European carmakers should be able to shoulder additional costs relating to diesel car emissions--such as the cost of software updates--without problems, according to Commerzbank analyst Frank Hussing. After all, their balance sheets are strong, while cash on hand and short-term investments typically outweigh bond redemptions scheduled for this year and next among large German and French carmakers. "From our point of view, their ratings are not at risk," Mr. Hussing says. Meanwhile, potential antitrust fines imposed on German carmakers are so far unclear and purely speculative, he adds. (tasos.vossos@wsj.com, @tasosvos)

(END) Dow Jones Newswires

September 23, 2017 04:20 ET (08:20 GMT)

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