FedEx (FDX) PT Lowered to $291 at Goldman Sachs

Goldman Sachs analyst Jordan Alliger lowered the price target on FedEx (NYSE: FDX) to $291.00 (from $293.00) while maintaining a Buy rating.

The analyst comments "Bottom Line: We are lowering our FY3Q (Feb) quarter EPS to $3.30 p/s from $3.75 to reflect a few key adjustments; including 1) what looks to be ongoing softness in B2B activity as denoted by recent DHL earnings report which called out zero 4Q B2B growth, as well as a lack of meaningful acceleration in B2B thus far in 2024, 2) Mix related pressures as still soft global economies likely create more international economy versus priority shipments, and 3) potential impact from tough January weather, which was called out by most transports during 4Q reporting season. Net, net the volume, weather and mix cause us to be more cautious around Express margins (we forecast about a $10mm EBIT loss), however we stress that our Ground and Freight (LTL) margins remain intact, and that optionality to any goods related recovery would in our view lead to typical sharp up cycle in Express margin that the market is accustomed to when coming out of a freight recession – producing above transport sector average profit recovery upside potential – especially given the recent Drive related cost and productivity initiative. At the end of the day, we point out our FY 3Q EPS estimate reduction of about 12% for FDX is in line with the 12% median EPS estimate reduction we made to companies in our coverage post 4Q EPS (we reduced 1Q estimates for 18/20 covered companies, ex FDX who is on different fiscal year). We remain Buy rated, and note that valuation remains attractive at just 12x NTM EPS."

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