FedEx Gains on Solid FY23 Outlook, Analysts Mostly Bulled Up Into Next Week’s Investors Day

This post was originally published on this site

FedEx (NYSE:FDX) gained 3% in pre-open trading Friday following solid fourth-quarter earnings results and higher fiscal 2023 guidance. The results have prompted several Wall Street analysts to raise their price targets today.

The shipping giant reported Q4 EPS of $6.87, versus the consensus estimate of $6.88. Revenue was $24.4 billion, compared to the consensus estimate of $24.47 billion and $22.6 billion last year. FedEx expects full 2023-year EPS to be in the range of $22.50-$24.50, above the consensus estimate of $22.41. CEO Raj Subramaniam told investors the company will be focused on revenue quality and lowering their cost to serve. The company also recently raised the quarterly dividend 53% to $1.15 per share, or $4.60 annualized.

Following the results, Loop Capital analyst Rick Paterson reiterated a Buy rating and raised his price target from $328 to $339. Paterson said he is giving the company a pass on the penny per share earnings miss and said more important was the “constructive” fiscal 2023 EPS guidance that will push up consensus by about 6%. The analyst is also looking forward to the heading the investor meeting on June 28/29 where FedEx’s new CEO will presumably lay out his multi-year strategic plan.

UBS analyst Thomas Wadewitz said the CEO’s new strategy to focus on revenue quality and costs will support margin improvement on a multi-year basis. Wadewitz is also positive into the June 28 /29 meeting. He said the detailed plans and financial targets remain important drivers but the new strategy indicates the company is “moving on the right path.” The analyst reiterated a Buy rating and raised his price target from $300 to $312.

Morgan Stanley’s Ravi Shanker was not as bullish as the others, in fact, he pointed to the fact that Express + Ground EBIT missed the consensus by about 10% despite low expectations in 4Q. While FY23 guidance was raised, the analyst thinks the company has a “very hard time getting there given macro conditions and the pandemic unwind.” The analyst reiterated an Equal Weight rating and a $245 price target.