FedEx (FDX) Price Target Raised at Barclays on Strong Results Expectations

June 23, 2021 5:32 AM EDT
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(Updated - June 23, 2021 11:02 AM EDT)

Barclays analyst Brandon Oglenski raised the price target on FedEx (NYSE: FDX) to $375.00 per share from $360.00 per share as he expects the company to report strong results and “likely resumption of favorable forward guidance.”

“Following a less robust UPS investor day than many had expected, shares of both FedEx and UPS have recently lagged (down 2-3% relative to S&P500 since 8 Jun 21). Nonetheless, with UPS committing to improving pricing and customer mix in the US package business along with a lower capital spending outlook, we see favorable market dynamics for the more growth-oriented FedEx. Further, while investors are concerned about the resumption of international passenger airline operations and the negative pricing headwinds it will carry for airfreight markets, we find the potential challenges are manageable for FedEx and UPS as potential mid-single digit EPS headwinds could be more than offset by continued strong global demand for ecommerce package deliveries,” the analyst said in a note.

Oglenski is expecting the company to benefit from strong demand and higher pricing, which should yield higher-than-expected Q4 results and higher full-year guidance.

“With recent domestic US pricing outcomes accelerating at both FedEx and UPS, we see continued strength in retail activity and low inventory levels supporting a robust near- term outcome for FedEx earnings. We also expect management will reinstate annual guidance, with our model suggesting 15% growth could be attainable, which would put FY22 EPS north of $21. We update our pension estimates, which add 30c or ~2% to our FY22 EPS outlook; FedEx app data also encouraging. Please see page three for more details. We update our FedEx pension estimates to reflect higher interest rates and likely strong asset returns in the prior period, which should support higher below-the-line pension income in FY22. Further, we provide a review of FedEx average daily users of the company's shipping app, which was abnormally elevated in the past quarter, potentially signaling strong volume outcomes,” he concludes.

Fedex stock price is up 0.15% on the day ahead of tomorrow’s earnings results.

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