FedEx Corp. Stock Sees Buying Opportunity After Earnings Miss

Shares of FedEx Corp. (FDX) have experienced a significant decline following the company’s recent earnings miss. However, according to one Wall Street analyst, this drop presents an attractive buying opportunity for investors.

In morning trading, FDX stock tumbled 10.7%, making it the top decliner in the S&P 500 index and potentially heading towards its largest one-day selloff in 15 months.

Although the stock has since recovered some of its losses, reaching a low of $246.05 after opening at $239.36, according to FactSet data, Citi Research analyst Christian Wetherbee believes that the selloff has been overblown.

Despite expressing disappointment over the second-quarter results, specifically citing the Express segment’s underperformance, Wetherbee maintains his buy rating and a target stock price of $300, suggesting a 20% upside from current levels.

Wetherbee argues that the overall outlook for FedEx is not as dire as the Express segment’s results may imply. He attributes the disappointment to cyclically low margins and anticipates that earnings power will remain steady through fiscal 2025.

With this analysis in mind, Wetherbee views any share-price pullbacks as a prime opportunity for investors to buy into FedEx stock.

Conclusion

While FedEx Corp. has faced setbacks with its recent earnings miss, Citi Research analyst Christian Wetherbee sees this as a chance for investors to capitalize on an undervalued stock. Despite expressing disappointment in the second-quarter results, Wetherbee believes that the longer-term trajectory of FedEx’s earnings power remains intact. With a buy rating and a target stock price indicating significant upside, Wetherbee suggests that now may be the right time to invest in FedEx.

FedEx Faces Mixed Opinions from Analysts

Introduction

In light of recent developments, opinions among analysts regarding FedEx’s future outlook seem to be divided. While some express optimism, others take a more cautious approach. The company’s stock price targets have also been adjusted accordingly.

Analysts’ Assessments

J.P. Morgan’s Brian Ossenbeck

Brian Ossenbeck from J.P. Morgan has revised his price target to $305 from $322. Despite this adjustment, he maintains a neutral rating. Ossenbeck highlights softer demand trends in the U.S. for FedEx’s Express business, which he believes temporarily hinders potential improvements. He suggests that until the company can regain momentum in Express, the bullish case becomes uncertain.

Raymond James’ Patrick Brown

Patrick Brown, an analyst at Raymond James, reiterates his outperform rating but lowers his price target to $275. Brown expresses admiration for FedEx’s initiatives to improve profitability in Express. However, he acknowledges the reality that turning this business around has taken longer than anticipated. Consequently, he adopts a “wait-and-see” approach towards Express.

Overall Analyst Sentiment

Of the 33 analysts surveyed by FactSet who cover FedEx, 20 maintain a bullish outlook while 13 remain neutral. These analysts have set an average stock price target of $295.79.

Performance Comparison

In terms of stock performance, FedEx has experienced a 3.4% decline month-to-date. However, it has recorded an impressive 44.4% increase year-to-date. In comparison, the Dow Jones Transportation Average DJT has rallied 19.7% this year, and the Dow Jones Industrial Average DJIA has seen a 13.3% rise.

Conclusion

With conflicting assessments from analysts, FedEx faces a complex landscape. While some analysts are cautiously optimistic about the company’s turnaround efforts in the Express business, others emphasize the need for tangible improvements. As the stock continues to fluctuate, investors must carefully evaluate the company’s ability to regain momentum and drive future growth.