Q4 Preview: Depressed FedEx (FDX) Expectations, Restructuring Efforts Could Leave Room for Upside

Shares of FedEx (NYSE: FDX) are trading nicely higher Monday afternoon ahead of the company's fourth-quarter 2012 earnings report, expected out before the market opens on Tuesday. While the Dow Jones and S&P 500 are down 36 points and up nearly 1 point, respectively, FedEx shares are up almost 1 percent.

Analysts are looking for quarterly earnings of $1.94 per share on sales of $11.13 billion. FedEx reported third-quarter 2012 EPS of $1.65 and fourth-quarter 2011 earnings of $1.75 per share. Sales totaled $10.56 billion last quarter and $10.60 billion in the same quarter last year.

According to StreetInsider.com's Earnings History page, FedEx has beat the Street's earnings estimates by nearly 7 percent over the last six quarters.

Data from Bloomberg shows 17 analyst firms with a Buy rating on FedEx shares, six with a Hold, and none suggesting to Sell the stock ahead of the results. Analysts' price targets range from $85 to $123.

Analyst Commentary:

• Deutsche Bank - Sees possible upside to fourth-quarter figures "given the tailwind from falling fuel prices and improved profitability at Freight." The firm says investors will be looking closely at the company's FY13 guidance, which is places in a wide range of $7-$8. Deutsche Bank sees the restructuring of FedEx's Domestic Express unit helping the annual outlook. The wide FY13 range will likely be attributed to the uncertain economic backdrop.
  
  Maintains Buy rating and $123 price target into the report.
  
  
• JPMorgan - Amid some positives (lower fuel prices, easier international comps) and negatives (pension expense headwind), the firm believes the overall story "has room for upside with cost savings from a restructuring as an important positive." JPMorgan also noted expectations which are low amid the macro environment. While the firm does not expect many details to FedEx's restructuring program, "FDX is likely to provide sufficent information along with a strong first step (plane retirements) so that investors can begin to give them some credit regarding future costs savings which could provide a boost to the stock."
  
  Maintains Overweight and $105 price target.

FedEx generally reports right at or just a minute after 7:30am ET. Stay tuned to our Earnings category to get all the breaking earnings news in real time.

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