FedEx Faces Cyclical Risk, Yet 3 Key Factors Keep Bullish Analyst Undeterred

Shares of FedEx Corp FDX climbed last week after the company reported upbeat quarterly results.

The company’s long-term structural opportunity offsets the near-term cyclical risk, according to Susquehanna.

The FedEx Analyst: Bascome Majors upgraded the rating for FedEx from Neutral to Positive, while raising the price target from $225 to $315.

The FedEx Thesis: Although there is a cyclical risk to the company’s key consumer and industrial markets around the world, “we're comfortable with that risk for three reasons,” Majors said in the upgrade note.

Check out other analyst stock ratings.

As to the first reason, the analyst wrote, “Our look at 25 years of FDX volumes vs. share performance suggests investors buying the volume declines we've seen in recent quarters typically do well over the next 12 months on both an absolute and market-relative basis.”

Secondly, the guidance for fiscal 2024 “fully absorbs both the return of incentive comp and unwind of pandemic pricing in international export parcel,” he added.

“Third, our forecasts for FDX's market-share-leading LTL business Freight are currently conservative vs. sell-side consensus for standalone peers,” which could “cushion some cyclical downside to our parcel forecasts,” Majors stated.

FDX Price Action: Shares of FedEx were up 0.32% to $265.64 at the time of publication Monday.

Now Read: Tesla Clearly 'Missed Street Estimates,' Analysts Weigh In On Q3 Deliveries

Photo: Shutterstock