Jefferies Sees Potential Upside for FedEx (FDX) into Q4 Earnings; Maintains 'Buy', $112 PT
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Price: $253.18 --0%
Rating Summary:
24 Buy, 16 Hold, 0 Sell
Rating Trend: Up
Today's Overall Ratings:
Up: 9 | Down: 10 | New: 43
Rating Summary:
24 Buy, 16 Hold, 0 Sell
Rating Trend: Up
Today's Overall Ratings:
Up: 9 | Down: 10 | New: 43
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Jefferies comments on FedEx (NYSE: FDX) ahead of the Company's fourth-quarter earnings report, expected out Wednesday. The firm affirms its Buy rating and $112 price target.
Jefferies notes that expectations are low heading into the report, meaning there is potential upside should FedEx produce in-line results paired with comparable FY12 guidance. The firm is expecting EPS of $1.75, just ahead of the $1.73 consensus.
Key items about FedEx over the last several months: (1) the stock's relative strength (RSI) has dipped to 37 (UPS (NYSE: UPS) is even lower at 30); (2) FDX is down 8.8% since the end of April (vs. the S&P down 6.6%), and is now down 7% YTD; (3) consensus is below the midpoint of guidance; and (4) multiple analysts have talked down numbers citing fuel and (to a lesser extent) understandable macro concerns.
Fuel shouldn't be a factor in owning the stock, Jefferies notes. Although the commodity has been a headwind, much of that is already discounted in the stock. Volume expectations should also be set aside when taking a look at the stock. Jefferies comments: "As a read-across, multiple PMs pointed out to us back during UPS's 1Q report that its 2Q domestic volume guidance of 2% felt "underwhelming." Layer in a fading global macro backdrop, and we think the market is focused primarily what the volume impact will be to FDX's F2012 outlook."
Jefferies sees "see domestic parcel yields, combined with cyclical strength in LTL pricing, as the key drivers of F4Q and F2012 guidance." The firm notes that FedEx faces easier expense comps when compared to competitors.
For more analyst coverage on FedEx, click here. For a ratings history of FDX, click here.
FedEx is flat ahead of the market.
Jefferies notes that expectations are low heading into the report, meaning there is potential upside should FedEx produce in-line results paired with comparable FY12 guidance. The firm is expecting EPS of $1.75, just ahead of the $1.73 consensus.
Key items about FedEx over the last several months: (1) the stock's relative strength (RSI) has dipped to 37 (UPS (NYSE: UPS) is even lower at 30); (2) FDX is down 8.8% since the end of April (vs. the S&P down 6.6%), and is now down 7% YTD; (3) consensus is below the midpoint of guidance; and (4) multiple analysts have talked down numbers citing fuel and (to a lesser extent) understandable macro concerns.
Fuel shouldn't be a factor in owning the stock, Jefferies notes. Although the commodity has been a headwind, much of that is already discounted in the stock. Volume expectations should also be set aside when taking a look at the stock. Jefferies comments: "As a read-across, multiple PMs pointed out to us back during UPS's 1Q report that its 2Q domestic volume guidance of 2% felt "underwhelming." Layer in a fading global macro backdrop, and we think the market is focused primarily what the volume impact will be to FDX's F2012 outlook."
Jefferies sees "see domestic parcel yields, combined with cyclical strength in LTL pricing, as the key drivers of F4Q and F2012 guidance." The firm notes that FedEx faces easier expense comps when compared to competitors.
For more analyst coverage on FedEx, click here. For a ratings history of FDX, click here.
FedEx is flat ahead of the market.
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