- Morgan Stanley analyst Ravi Shanker reiterated an Equal Weight rating on the shares of FedEx Corp FDX with a price target of $180.
- The analyst is modeling 4Q adjusted EPS of $4.63, 5% below the consensus of $4.87. The analyst's FY23 EPS view of $14.65 remains comfortably below the consensus of $14.81 and just above the low-end of management's guidance.
- On the Domestic side, while the consumer seems to be holding in relatively well, many other relevant macro datapoints have continued to muddle along at subdued levels, said the analyst.
- However, Morgan Stanley's proprietary AlphaWise Parcel Flight Tracker data suggest that FDX's April Domestic flight frequency has materially underperformed seasonality.
- On Freight, sluggish updates and commentary for peers suggests another tough volume quarter though this should be at least partially offset by yields remaining low-single digits, noted the analyst.
- While the analyst expects management to continue to focus on delivering cost actions, the analyst believes outrunning a tougher topline may prove harder than consensus expects.
- The analyst sees the majority of the earnings pressure seen in FY23 as a post- pandemic mean-reversion rather than macro-related.
- FDX has been a top 5 best-performing stock in the analyst's coverage year-to-date, partly reflecting the easier comp but also the market's preference for idiosyncratic stories in a mixed macro environment.
- The analyst thinks the real risk to numbers going forward comes from the revenue line.
- The analyst believes that revenues are probably even more important to the stock price (relative to expectations) and to offset inflation headwinds.
- Price Action: FDX shares are trading higher by 2.39% at $222.49 on the last check Friday.
- Photo Via Company
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