Greater Margins For FedEx Expected Through 2011/2012

Piper Jaffray attended FedEx Corporation's FDX Investors and Lenders meeting, and walked away feeling that the company's trajectory earning potential is greater than Consensus EPS estimates suggests. In the research report, Piper Jaffray writes "Management reiterated +10% longer term Express operating margin; further conviction in attainability. Much of the focus was on Express revenue growth and margin improvement. A +10% Express operating margin this cycle vs. last seems a more likely potential we believe given (1) larger International, (2) prior cost savings / greater efficiencies, and (3) likely greater pricing power given DHL US market exit. We highlight our above Consensus EPS estimates currently assume a +6%ish Express operating margin in F2011 and F2012." Piper Jaffray maintains its Overweight rating and $110 price target. FedEx Corporation closed yesterday at $86.37.