We are initiating coverage on Ryder System, Inc. (R) with an Underperform recommendation. The company’s fourth quarter earnings were a nickel short of the Zacks Consensus Estimate.

The decline was driven by decreased global results in full service lease, higher pension expense, reduced commercial rental performance and lower results from used vehicle sales. The company is planning for a better relative freight pricing market and more freight opportunities in 2010. Ryder also continues to actively evaluate its pipeline of acquisition candidates and consider share repurchase opportunities.

However, the company faces a prolonged freight recession on its lease business, which will compress earnings in the near future. Our target price is $32 per share.Zacks Investment Research