⌛ Did you miss ProPicks’ 13% gains in May? Subscribe now & catch June’s top AI-picked stocks early.Unlock Stocks

FedEx surges 11% after lifting guidance; analysts upgrade amid 'deeply-discounted valuation'

Published 03/16/2023, 04:25 PM
Updated 03/17/2023, 05:37 AM
© Reuters.
FDX
-

By Yasin Ebrahim and Senad Karaahmetovic

Investing.com -- FedEx lifted its guidance Thursday after reporting third quarter earnings that markedly beat expectations as its ongoing efforts to cut costs helped offset ongoing demand weakness.

FedEx Corporation (NYSE:FDX) shares are trading 11% higher in pre-open Friday following the report.

FedEx announced earnings per share of $3.41 on revenue of $22.20 billion. Analysts polled by Capital IQ anticipated EPS of $2.76 on revenue of $22.74B.

"Third quarter results were negatively affected by continued demand weakness, particularly at FedEx Express," the company said. Cost-cutting efforts, however, partly blunted the impact of weaker demand and inflation on operating income, it added.

"We've continued to move with urgency to improve efficiency, and our cost actions are taking hold, driving an improved outlook for the current fiscal year," the company said.

In fiscal 2023, the company upgraded its guidance on adjusted EPS in the range of $13.80 to $14.40, up from $12.50 to $13.50 previously.

"Our improved earnings outlook demonstrates confidence in our ability to execute while managing the continued global volume softness we are experiencing across the business," the company said.

Stifel analysts raised the rating to Buy from Hold and the price target to $222 per share from the prior $171.

"Emerging consensus around an inventory bottom and pull forward with early signs of execution on two significant tranches of cost savings initiatives ($3.7bn and $4bn, respectively) present a compelling investment opportunity at the current, deeply-discounted valuation, in our view," the analysts wrote in a note.

Citi analysts raised the price target by $25 to $275 per share.

"Beyond the beat and F4Q raise, we think the potential earnings upside in F24 is quite large, as FedEx posted solidly better... With upcoming catalysts coming from DRIVE day on April 5th and a relatively low F4Q hurdle, we would expect strong upside follow through from FedEx shares," the analysts said.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.