Transportation

Why Most Analysts Think FedEx Is a Buy After Earnings

When FedEx Corp. (NYSE: FDX) reported its fiscal second-quarter results after the markets closed on Thursday, the delivery services giant reported $4.83 in earnings per share (EPS) and $20.6 billion in revenue. The consensus estimates had called for $4.01 in EPS and revenue of $19.46 billion. In the same period of last year, the company reported EPS of $2.51 and $17.3 billion in revenue.

Management said that the strong revenue and earnings growth this quarter is a reflection of their continued hard work and commitment to customers. Also, these results demonstrate the unparalleled strength of FedEx’s global express network, the breadth of its e-commerce capabilities and the dedication of its people.

Operating results increased due to volume growth in FedEx International Priority and U.S. domestic residential package services, and pricing initiatives across all transportation segments. These factors were partially offset by costs to support strong demand and to expand services, variable compensation expense and COVID-19-related costs.

FedEx noted that it will not be providing an earnings forecast for the fiscal 2021 full year. However, management was sure to note that the overall environment remains uncertain. The firm expects earnings growth in the second half of fiscal 2021 driven by the anticipated heightened demand for its services as FedEx continues to execute on its strategic priorities.

Looking ahead, analysts are calling for $16.40 in EPS and $76.76 billion in revenue for the 2021 fiscal full year. Also, the consensus estimates are $3.18 in EPS and $18.88 billion in revenue for the fiscal third quarter.

Here’s what a few analysts had to say following the report:

  • Credit Suisse reiterated a Buy rating with a $368 price target.
  • Oppenheimer reiterated a Hold rating.
  • Raymond James reiterated it as Outperform and raised its target to $305 from $280.
  • JPMorgan reiterated its Buy rating with a $350 target price.
  • Berenberg Bank reiterated a Buy rating with a $320 price target.

FedEx stock traded down 4% on Friday to $280.21, in a 52-week range of $88.69 to $305.66. The consensus price target is $314.50.