Is FedEx Actually in Trouble With China?
FedEx shares saw a bump on Tuesday even though a recent analyst report suggested that the package delivery firm could be hurt by the trade war with China.
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A recent analyst report suggested that FedEx Corp. (NYSE: FDX | FDX Price Prediction) could be hurt by the trade war with China. While shares of the package delivery firm saw a bump early Tuesday, a strong start to the trading session appeared to be lifting all boats.
UBS’s Thomas Wadewitz has a Sell rating for the stock and lowered the price target to $145 from $161, implying downside of 6% from Friday’s closing price of $154.28. Note that this is the biggest bear for FedEx in recent memory.
FedEx posted revenues of roughly $65.45 billion at the end of its previous fiscal year. Consensus estimates are calling for $69.78 billion in revenue for the current fiscal year, which ended in May, though FedEx is not reporting until late June. UBS is estimating that China-related business revenue is roughly $4.5 billion, or about 6% of total revenue.
Wadewitz detailed in the report:
While it is difficult to anticipate the outcome [of China’s investigation], we believe it is reasonable to anticipate pressure on [FedEx’s] business with a portion of its China outbound customers which adds to the current backdrop of weak international airfreight activity.
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UBS cut its fiscal 2020 and 2021 earnings per share (EPS) estimates to $15.00 from $15.45 and $15.25 from $16.50, respectively. The consensus earnings estimates are $16.66 per share in 2020 and $18.41 per share in 2021.
Shares of FedEx were trading up 1.4% at $154.44 on last look, in a 52-week range of $150.68 to $266.67. The consensus price target is $208.48.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
