Ravi Shanker, an analyst from Morgan Stanley, maintained the Hold rating on FedEx (FDX – Research Report). The associated price target is $210.00.
Ravi Shanker has given his Hold rating due to a combination of factors that suggest a nuanced and uncertain outlook for FedEx. Despite a better-than-anticipated performance in the Express segment, which had been underperforming in recent quarters, there are lingering doubts about the sustainability and quality of earnings. The unexpected positive results from Express were largely attributed to fuel cost savings and reductions in incentive compensation, rather than core operational improvements. Moreover, Shanker notes that revenue misses continue to be a concern, emphasizing structural issues within the business that may not be resolved in the short term.
Additionally, Shanker expresses caution given the unchanged full-year guidance despite the third-quarter beat, hinting at potential concerns over the persistence of the recent positive trends. The Ground segment’s miss and the unchanged guidance could signal diminishing returns from FedEx’s ongoing DRIVE initiative. Furthermore, the considerable stock buyback announcement, while providing a temporary boost in share price, does not alleviate long-term performance anxiety. Shanker believes it is premature to declare a definitive turnaround for the Express segment, especially with the pending USPS contract update and questions regarding the timing of cost savings realized in the third quarter.
According to TipRanks, Shanker is an analyst with an average return of -2.1% and a 48.73% success rate. Shanker covers the Industrials sector, focusing on stocks such as FedEx, American Airlines, and Sun Country Airlines Holdings.
In another report released yesterday, J.P. Morgan also maintained a Hold rating on the stock with a $301.00 price target.
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FedEx (FDX) Company Description:
Founded in 1971, FedEx Corp. is a multinational delivery services company based in Tennessee. It provides transportation, e-commerce, and business services worldwide. The company offers integrated business solutions through operating companies competing collectively, operating collaboratively and innovating digitally under the FedEx brand.
