Why This FedEx Analyst Sees Improving Express, Ground Prospects

A proprietary KeyBanc Capital markets index ndicates continued strong business-to-consumer volumes in early 2021, the sell-side firm said in a note. 

FedEx Corporation FDX faces a rational pricing environment and the opportunity to gain market share as United Parcel Service, Inc. UPS “takes a more measured approach to volume growth,” according to KeyBanc. 

The FedEx Analyst: Todd Fowler upgraded FedEx from Sector Weight to Overweight and established a $350 price target. 

The FedEx Takeaways: B2C volumes are up 58% year-to-date, consistent with the levels in the second half of 2020, Fowler said in the upgrade note.

“Further, we are encouraged by indications of resilient airfreight dynamics with demand improving against limited incremental capacity which may sustain Express load factors and margins intermediately,” the analyst said. 

“Lastly, we view broader improvements in industrial production and economic activity as increasingly favorable for B2B demand.” 

The analyst raised the FedEx earnings estimate for fiscal 2022 from $19.50 per share to $20.70 per share to reflect “an improved Express and Ground outlook.”

FDX Price Action: Shares of FedEx were up 0.18% at $291.32 at last check Tuesday.