Shares of FedEx Corp. have fallen so much on the back of the package delivery giant’s earnings miss, that it has created an attractive buying opportunity for investors, one Wall Street analyst said.
The stock FDX, -10.85% tumbled 10.7% in morning trading, enough to pace the S&P 500 index’s decliners, and to put it on track for the biggest one-day selloff in 15 months.
The stock has pared some losses, as it was down as much as 12.1% at its post-open intraday low of $ 246.05, and as much as 14.5% at its premarket low of $ 239.36, according to FactSet data.
FedEx’s stock tumbles, but was down a lot more in early trading.
FactSet, MarketWatch
Citi Research analyst Christian Wetherbee said while he was “disappointed” by the second-quarter results, amid “meaningfully worse” than expected Express results, he believes the stock’s selloff is overdone.
“We view any share-price pullback as a buying opportunity as we don’t think much has changed in the trajectory of earnings power through [fiscal] 2025,” Wetherbee wrote in a note to clients.
Wetherbee reiterated his buy rating and his $ 300 stock price target, which implied 20% upside from current levels.
He said the outlook for FedEx isn’t as bad as the Express segment’s results would suggest, as he believes the disappointment is as simple as the continuation of cyclical low margins, as volume hits cycle lows.
“When the cycle turns (which may be happening now), we think leverage will return,” Wetherbee wrote.
Other analysts weren’t as optimistic, as now fewer than eight analysts cut their stock price targets following the earnings report.
J.P. Morgan’s Brian Ossenbeck cut his price target to $ 305 from $ 322, while keeping his rating at neutral.
He said softer demand trends in the U.S. for FedEx’s Express business “knocks the wind out of the bull case” until the company can re-establish the potential for improvements in Express.
And Raymond James’ Patrick Brown reiterated his outperform rating but lowered his price target to $ 275. He said that while he remains “enamored” with FedEx’s initiatives to turn profitability in Express, the reality is that a turnaround in the business “has been years on-the-come.” Therefore, he is still in “wait-and-see” mode on Express.
Of the 33 analysts surveyed by FactSet who cover FedEx, 20 are bullish and 13 are neutral. The average stock price target is $ 295.79.
FedEx’s stock has lost 3.4% month to date but has soared 44.4% year to date. In comparison, the Dow Jones Transportation Average DJT has rallied 19.7% his year and the Dow Jones Industrial Average DJIA has advanced 13.3%.