Shares of FedEx (NYSE:FDX) fell sharply in morning trading Monday, dropping more than 6.5% from their previous closing price on the back of an analyst note that warned of a consequential change in management.
Bank of America Merrill Lynch (NYSE:BAC) on Monday downgraded FedEx and slashed its price target for the stock to $220 from $304. The firm pointed to the abrupt exit of FedEx’s Express unit chief last week as a signal that the shipping giant could be struggling to reach a profit goal.
“The company made a surprising change to its Express CEO, which we believe could signal a reduction or delay in its profit improvement target,” wrote BOAML’s Ken Hoexter in a note. “This is a rapid and, in our view, out of character change for a company that is still operated by its founder, chairman & CEO Fred Smith.”
Hoexter is referring to the departure of Dave Cunningham, who FedEx recently said would be leaving his role as head of the company’s air delivery unit. Cunningham’s exit is perhaps more perplexing when one considers that FedEx is right in the middle of its busiest period of the year.
Hoexter’s new call would represent a roughly 9% climb from FDX’s Friday close. In morning trading, the stock was down about 6% to around $189 per share. Shares had lost more than 23% in the past six months prior to today.
The earnings outlook for FedEx is showing mixed trends. For instance, FedEx has witnessed one positive revision and one negative revision to current-quarter EPS estimates within the last 30 days, and the overall consensus estimate for that period has moved one penny lower.
Nevertheless, revisions have been more positive for FedEx’s full fiscal year ending in May 2019. For that period, three positive revisions have been delivered in the last 30 days, and the consensus mark has added two cents in that time. FedEx is now expected to tally full-year earnings of $17.37 per share, which would represent year-over-year growth of 13.5%.
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FedEx Corporation (FDX): Free Stock Analysis Report
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