A J.P. Morgan analyst downgraded FedEx ( FDX) to neutral from overweight Wednesday, citing a boost in competition.

Gregory Burns said the company's fourth-quarter ground-unit shipping volume increased 13%, which was lower than a 24% increase in the third quarter. The weakened volume suggests an increase in competition from UPS ( UPS), he said.

"With a further slowdown in ground volumes expected in the fiscal first half 2004, we believe FedEx's discount to UPS (25%) is appropriate. We had previously believed a more narrow discount could be justified," said Burns. The stock is currently trading at 19.8 times the analyst's calendar 2003 EPS estimates. These two factors leave little room for upside, he said.

Burns doesn't believe the volume slowdown can be explained by "purely macro factors." He believes that rival UPS has reclaimed momentum faster than anticipated.

The company's fourth-quarter earnings, released Tuesday , were 92 cents a share and missed the analyst's estimate of 93 cents. But the analyst maintained his 2004 EPS estimate of $3.30, excluding charges.

Shares of FedEx closed at $60.47 Tuesday. UPS shares closed at $63.60.