FedEx (FDX) Gains on Solid FY23 Outlook, Analysts Mostly Bulled Up Into Next Week's Investors Day

June 24, 2022 6:47 AM EDT
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Price: $234.89 -0.51%

Rating Summary:
    23 Buy, 15 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 18 | Down: 53 | New: 12
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FedEx (NYSE: FDX) gained 3% in pre-open trading Friday following solid fourth quarter earnings results and higher fiscal 2023 guidance. The results have prompted several Wall Street analysts to raise their price targets today.

The shipping giant reported Q4 EPS of $6.87, versus the consensus estimate of $6.88. Revenue was $24.4 billion, compared to the consensus estimate of $24.47 billion and $22.6 billion last year. FedEx expects full 2023-year EPS to be in the range of $22.50-$24.50, above the consensus estimate of $22.41. CEO Raj Subramaniam told investors the company will be focused on revenue quality and lowering their cost to serve. The company also recently raised the quarterly dividend 53% to $1.15 per share, or $4.60 annualized.

Following the results, Loop Capital analyst Rick Paterson reiterated a Buy rating and raised his price target from $328 to $339. Paterson said he is giving the company a pass on the penny per share earnings miss and said more important was the "constructive" fiscal 2023 EPS guidance that will push up consensus by about 6%. The analyst is also looking forward to the investor meeting on June 28/29 where FedEx's new CEO will presumably lay out his multi-year strategic plan.

UBS analyst Thomas Wadewitz said the CEO's new strategy to focus on revenue quality and costs will support margin improvement on a multi-year basis. Wadewitz is also positive into the June 28 /29 meeting. He said the detailed plans and financial targets remain important drivers but the new strategy indicates the company is "moving on the right path." The analyst reiterated a Buy rating and raised his price target from $300 to $312.

Morgan Stanley's Ravi Shanker was not as bullish as the others, in fact he pointed to the fact that Express + Ground EBIT missed the consensus by about 10% despite low expectations in 4Q. While FY23 guidance was raised, the analyst thinks the company has a "very hard time getting there given macro conditions and the pandemic unwind." The analyst reiterated an Equal Weight rating and $245 price target.

By Staff

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