June 14 2012 06:51 PM

Stifel, Nicolaus & Company--Parcel consolidator, Streamlite, Inc., has shut down operations, which is a net positive for both FedEx (FDX: $86.84; Buy) and UPS (UPS: $77.37; Hold), but more so for FedEx, in our view, given its stronger market position in the parcel consolidator market with industry-leader FedEx SmartPost. From our prior meetings with Streamlite management, we estimate it had ~$200mm of annual revenue and delivered roughly 200,000-250,000 packages per day. The company's (price-sensitive) customers should find their way first into the networks of FedEx SmartPost, DHL Global Mail, and Newgistics, in our view, as those are the main remaining small package consolidator options (vs. the faster and more expensive FedEx Ground or UPS Ground products). It is good for the remaining players, in our view, when a competitor shuts its doors, but due to the relative size of Streamlite, we believe EPS accretion to FedEx from additional volume should be minimal and practically immaterial.

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