How Analysts View FedEx After Earnings

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FedEx Corp. (NYSE: FDX) reported fiscal third-quarter financial results after the markets closed on Wednesday and investors were pleased. 24/7 Wall St. has collected some analysts reports on FedEx following the release of the earnings, and we have added in some highlights from the report as well.

The company said it had $2.51 in earnings per share (EPS) on $12.7 billion in revenue. That compared to Thomson Reuters consensus estimates that called for $2.34 in EPS on $12.38 billion in revenue. The same period from the previous year had $2.03 in EPS on revenue of $11.70 billion.

In terms of guidance, FedEx expects its EPS for the 2016 fiscal year to be in the range of $10.70 to $10.90, up from the previous outlook range of $10.40 to $10.90. Consensus estimates are EPS of $10.56 and $49.91 billion in revenue for fiscal 2016.

FedEx reported its segments as:

  • Express segment revenue was $6.56 billion, down 1% from last year, with operating income of $595 million, up 51%.
  • Ground segment revenue was $4.41 billion, up 30% from last year, with operating income of $557 million, down less than 1%.
  • Freight segment revenue was $1.45 billion, up 1% from last year, with operating income of $56 million, down 16%.


Merrill Lynch reiterated a Buy rating with a $170 price objective. The firm said in its report:

Improves outlook with fiscal fourth quarter margin targets; price objective to $170 FedEx raised the bottom end of its fiscal 2016 outlook to $10.70-$10.90 from $10.40-$10.90 (before year-end market-to-market pension accounting adjustments and TNT and legal costs). Given the strong results, its target for 12% Express operating margins in the fourth quarter (we had been at 11.3%), we increase our fiscal 2016 and fiscal 2017 EPS estimates 4% each to $10.90 and $12.20 from $10.45 and $11.70, respectively. We increase our price objective to $170 from $164, holding our 14.0-times target multiple on our revised results.

Credit Suisse has an Outperform rating with a $185 price target. The firm also raised its EPS estimates for fiscal 2016, 2017 and 2018 to $10.85, $12.13 and $13.35, from $10.46, $11.81 and $13.07 respectively. Part of what tripped up the Ground segment during the third quarter were operational complexities that arose from “extraordinary growth” in non-traditional e-commerce volumes such as “mattresses, canoes, swing sets, and big screen TVs.” FedEx is addressing this issue and the company expects a return to mid-teens Ground margins in the fourth quarter.

S&P Capital IQ noted in its report:

We keep our 12-month target price at $195, valuing the shares at 16.1-times our fiscal 2017 (May) EPS estimate of $12.13 (raised today from $12.03), about in line with the average ten year forward P/E for the shares. We also raise our fiscal 2016 EPS estimate to $10.82 from $10.58 after February-quarter EPS of $2.51 vs. $2.01 beat our $2.37 estimate on better revenues than we were expecting. Results benefited from strong operating margin improvement on volume growth and profit improvement initiative effects. We think FedEx is poised to benefit from strong online spending that we expect to continue.

A few other analysts weighed in on FedEx as well:

  • Avondale Partners has a Market Outperform rating with a $182.50 price target.
  • Citigroup has a Buy rating and raised its price target to $180 from $175.
  • Cowen has an Outperform rating and raised its price target from $175 to $180.
  • Nomura has a Neutral rating and lowered its price target to $180 from $190.
  • RBC Capital has a Sector Perform rating with a $158 price target.
  • UBS has a Buy rating and raised its price target to $186 from $169.
  • Deutsche Bank has a Buy rating with a $190 price target.

Shares of FedEx were trading up at 10% at $159.26 on Thursday, with a consensus analyst price target of $173.91 and a 52-week trading range of $119.71 to $185.19.