FedEx (FDX): Buy Into Weakness - Stifel

Stifel analyst, David Ross, noted that FedEx (NYSE: FDX) reported adjusted F4Q16 EPS of $3.30, beating the Street consensus estimate of $3.28. The outperformance was driven by strong Ground revenue growth and better-than-expected Freight profitability, as package volumes rose 10% y/y and Freight's volume growth nearly offset its pricing actions, wage increases, and mix headwinds. Turning to the outlook, management provided FY17 EPS guidance of $11.75-$12.25, excluding TNT. The pre-release Street consensus estimate of $12.17 were 1%-2% ahead of the mean guidance. Expectations for TNT accretion in year 1 (FY17) was minimal (+1%), as the analyst's prior estimate excluding TNT, would have been $12.10. Given likely dilution in year 1, he is cutting near-term estimates but keep longer-term estimates little changed.

The analyst suggests buying shares on weakness as it is a reasonably-valued quality company that should continue to grow earnings in a slow-growth global macro backdrop.

No change to Buy rating or price target of $179.00.

For an analyst ratings summary and ratings history on FedEx click here. For more ratings news on FedEx click here.

Shares of FedEx closed at $163.95 yesterday.

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