Morgan Stanley Setting FedEx Up For Multi-Year Growth

According to Morgan Stanley, FedEx FDX is being set up for another multi-year growth cycle. Morgan Stanley reported that its long reluctance to recommend FDX has stemmed from our concerns about cost headwinds, risks to guidance from fuel/weather and an inability to identify any near-term positive catalysts. “These earnings headwinds are subsiding and, after 14 months of trading sideways, shares are roughly inline with levels achieved as far back as Dec 2009. More important, we see catalysts emerging for FY12 and think that FDX is at the beginning of another multi-year growth cycle. Our base case assumes FDX will earn more than $9.00 in FY14. Using a conservative 15X multiple, that implies a $135-140 stock by May-13, a 20%+ CAGR.” FedEx closed yesterday at $115.00.