Shares of FedEx Corp. rose on Thursday after Stifel Nicolaus analyst Bruce Chan boldly urged investors to buy before the package delivery company reports earnings, saying there is “too much opportunity” for investors to ignore. The stock FDX, +2.47% rose 1% in morning trading, closing at a six-week low on Wednesday. FedEx is scheduled to report fiscal third-quarter results after the closing bell. For the second quarter, the company beat profit expectations but missed revenue by a wide margin. Stifel’s Chan said there were still “material risks” related to the continued slowdown in economic activity this year, which he believed increased expectations for an inventory bottom and early signs the company was implementing its “significant” cost-cutting initiatives. “An attractive investment opportunity at a current, deeply-discounted valuation.” He raised his rating to buy, after holding for the past six months, and raised his price target on the stock to $222 from $171. “In our view there’s still a lot of wood to chop, but pulling forward the news flow around some cost-saving measures and early progress on some of these initiatives gives us a baseline level of comfort that management is serious about making things happen. happen,” Chan wrote in a note to clients. The upgrade ahead of earnings is a bold move for the chain. His previous downgrade to hold on September 16, 2022, came after FedEx issued a profit and revenue warning that sent the stock down a record 21.4% that day. Analysts surveyed by FactSet expected adjusted earnings of $2.71 per share, down from $4.59 a year earlier, and revenue to fall 3.7% to $22.72 billion. Among the company’s business segments, FedEx Express revenue is expected to decline 8.7% to $10.49 billion, FedEx Ground revenue is expected to increase 0.4% to $8.77 billion and FedEx Freight revenue is expected to increase 8.1% to $2.26 billion. For FedEx’s second quarter, the company expected profit to beat expectations, but all missed expectations in its express, ground and freight segments. The stock is up 14.8% over the past three months, but down 12.7% over the past 12 months. By comparison, the Dow Jones Industrial Average DJIA, +0.50% fell 7% and the S&P 500 index SPX, +1.05% fell 10.9%. “There is still market uncertainty and management still has work to do, but at current valuation levels, we believe the risk/reward offers upside potential for FDX shares, which could increase with further progress with productivity initiatives,” Chane said. wrote
