Upgrade to SI Premium - Free Trial

FedEx (FDX) Smashes Q2 Market Estimates, Analysts Lift PT

December 18, 2020 9:52 AM

FedEx (NYSE: FDX) crushed the market’s expectations for the second quarter by reporting EPS of $4.84 on sales of $20.6 billion. The Street consensus was $4.01 in earnings and $19.4 billion generated from sales for the quarter ended November 30.

“These results demonstrate the unparalleled strength of our global express network, the breadth of our e-commerce capabilities, and the dedication of our people,” said Frederick Smith, FedEx chairman and chief executive officer.

FedEx declined to provide investors with a fiscal 2021 earnings guidance, but it maintained its capital spending forecast for the full-year at $5.1 billion.

“The benefits of the investments across our business over the past several years are reflected in our strong second quarter results,” said Michael Lenz, executive vice president and chief financial officer.

“While the overall environment remains uncertain, we expect earnings growth in the second half of fiscal 2021 driven by the anticipated heightened demand for our services as we continue to execute on our strategic priorities.”

Following strong Q2 results, Goldman Sachs analyst Jordan Alliger raised the price target to $356.00 per share from prior $345.00 and reiterated a “Buy” rating after raising FY22 EPS to $18.75 from $18.00.

“Again, despite the high bar, we think there were some very positive takeaways from the quarter, and we reiterate our near/medium term and longer term view that the US parcel sector and FDX should continue to experience favorable trends,” Alliger said in today’s note.

“We continue to rate FDX shares a Buy (on CL) due to our view that the parcel sector should see ongoing favorable industry dynamics.”

Similarly, Cowen analyst Helane Becker raised the price target to $335.00 per share from prior $328.00 after witnessing a “phenomenal quarter” from FDX.

Still, shares trade 3.2% lower in pre-open Friday on profit-taking.

“FedEx reported blowout 2QFY21 results driven by record volume, revenue and margin improvement at Express & Ground. It appears some investors are selling the news; however, we believe all segments are performing well and expect continued margin improvement going forward. Ground margins will be the focus near-term given there is more potential there as the company improves residential delivery,” Becker said in a note.

“We are now more confident in $20 EPS and expect that to be a focus going forward for the investment community,” Becker noted before adding that the 2020 boom is unlikely to be over.

“As the pandemic forces millions online, e-commerce related volumes have skyrocketed. Each day in 2QFY21, FedEx transported 12.32 MM packages via Ground, 6.98 MM via Express, 30.91 MM pounds via Express Freight, and 110.98K shipments via Freight.”

Categories

Analyst Comments Analyst EPS View Earnings