FedEx Maintains Buy Rating at Deutsche Bank
Friday, September 23, 2021 2:53 PM

Analysts at Deutsche Bank retained Buy rating on the shares of FedEx Corp. (NYSE: FDX) as they believe that despite recent weaknesses in the stock, they see compelling value and long-term growth potential for the later. They set a price target of $117 for the stock.

In Its Q1 FY2012 earnings declared Thursday, FedEx registered 22 percent increase in its net income to $464 million, or $1.46 per share from $380 million, or $1.20 per share a year ago. Analysts had forecasted a net profit of $1.47 for the company. It recorded 11 percent increase in its revenue to $10.52 billion from $9.46 billion the previous year. DB analysts state that the company’s EPS beat their estimate of $1.42 per share and the beat was driven by a lower tax rate of 2 cents per share and lower non-operating expense of 2 cents a share. They add that while they were impressed by FedEx’s execution on ground, and improved results at freight, it disappointed on weak volumes and cost. They add that the stock massively underperformed yesterday by losing 8 percent, as investors failed to get comfortable with implied FY2011 second-half EPS guidance. They state that FedEx Express saw its margin deteriorate roughly 160 bps year-over-year as volumes declined worse than expected. They add that FedEx Ground’s margin expanded 323 bps year-over-years in FY2011 Q1 as the company leveraged a solid pricing environment as well as strong volume growth. They believe that FedEx is poised to continue expanding Ground margins given solid yield improvement and better network density. They state that while the company is relatively nimble responding to lower package volumes, FedEx typically takes 4 to 6 weeks to fully right size its Express network. They revise their FY2012 EPS estimates to $6.07 from $6.03, and FY2013 EPS forecast to $7.62, down from $7.65.


On a year-to-date basis, FedEx has a share performance of -17.86 percent, and as compared to Standard & Poor’s 500, it has an YTD share performance of -15.05 percent.


FedEx provides transportation, e-commerce, and business services in the US and internationally. It has a market capitalization of $24.23 billion with a P/E ratio of 15.530. It has more than 317 million outstanding shares.


Shares of FedEx added 0.86 percent or 69 cents to trade at $67.43.