FAA Reauthorization Risks Appear To Have Moderated: Deutsche Bank

Analysts at Deutsche Bank reiterate their "buy" rating on FedEx Corporation FDX. The target price for FDX is set to $114. According to Deutsche Bank, “the House attached language that would change the regulations governing FedEx Express employees from the Railroad Labor Act (RLA) to the National Labor Relations Act (NLRA). While this change would impair our Bull-thesis on FDX, we believe the probability of this taking place has dropped as it lacks support from the Senate.” In an interview with Dow Jones, Senate Commerce Committee Chairman John Rockefeller said “I know perfectly well if I put that [NLRA provision] in the bill… it’s not going to pass.” The analysts say, “We see this as a positive development for FDX and it likely removes some uncertainty as the FAA Reauthorization Bill discussions are expected to begin next week in Congress, according to Senate Majority Leader Harry Reid. While Senate Democrats may still hold a vote on the House measure (which includes the NLRA language) we are comforted by Senator Rockefeller’s comments and believe FAA headline risk has moderated and is now quite low.” “An important difference between a company that operates under the NLRA and the RLA is the ability to unionize and strike. Employees can only unionize on a national basis under the RLA (versus the possibility of unionization on a local basis under the NLRA). Classification under the NLRA would likely make unionization and strikes easier at FedEx Express,” Deutsche Bank adds. More Analyst Ratings here