5 FedEx Analysts On 'Solid' Q3 Print, Outlook: 'We Got That And More'

Benzinga - Shares of FedEx Corp (NYSE: FDX) jumped in early trading on Friday, after the company raised its earnings guidance.

• Raymond James analyst Tyler Brown maintained a Market Perform rating on the stock.
• Oppenheimer analyst Scott Schneeberger reiterated a Perform rating on the stock.
• Stephens analyst Jack Atkins reaffirmed an Overweight rating, while raising the price target from $200 to $290.
• Bank of America Securities analyst Ken Hoexter maintained a Buy rating, while raising the price target from $233 to $305.
• Bernstein analyst David Vernon reiterated an Outperform rating and price target of $246.

Raymond James

• While the company announced “good” results and raised its guidance, there are concerns around a slowing macro environment and “questions over cost containment programs,” Brown said in a note.
• “While we remained heartened by cost-saving initiatives and a higher than expected GRIs for FY23 (which are sticking), which should help stabilize trends as we close out FY23 and move into FY24, numbers remain hazy (in our view) as the stickiness of cost saves (variable vs. fixed) remains to be seen,” the analyst further wrote.

• While FedEx’s earnings exceeded conservative expectations, revenues came in slightly below, Schneeberger said. He added that the company’s adjusted operating income topped expectations on “assertively reduced expenses.”
• “Reinstating its previously withdrawn FY23 adjusted EPS guidance of $22.50–24.50 to $13.00–14.00 last quarter, FedEx now, in its F3Q23 release, increased it to $14.60–15.20 (-29% to -26% y/y),” the analyst wrote.

• “Investors were expecting a solid F3Q from FedEx on Thursday afternoon...we got that and more with a sizable beat vs. consensus expectations and an unexpected raise to the FY23 guide,” Atkins wrote in a note.
• “While investors will understandably discount that number until macro concerns begin to abate, the substantial level of "self-help" in this model should help insulate FDX's earnings from further demand deterioration and ultimately translate into meaningful earnings power in the future,” he added.

• FedEx expects sequential improvement in the current quarter, “in line with seasonality, with Ground margins climbing from last year’s double-digit level, Express moving into the mid-single digits, and Freight holding in the low-20’s,” Hoexter said.
• “While Express costs take time to ramp, it is moving to accelerate its cost takeout, with US headcount now down 25,000, from the 12,000 we highlighted in our Feb 2 upgrade, and as it parked 6 more planes 4QTD,” he added.

• “Improvement at Ground in a down market and discipline at Freight set the stage for lagging cost actions in Express to catch up and accelerate earnings in F2024,” Vernon said.
• “As some of those cost actions will stick through at least the early part of a next freight cycle, this stock has room to run,” he added.

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