FedEx on the Street: Analyst Views after the Fiscal 1Q18 Results
FedEx and the cyberattacks
Though FedEx (FDX) has the presence across the globe, rival United Parcel Service (UPS) is more dominant in the international arena—especially in Europe. FDX’s TNT Express acquisition gave the Memphis-headquartered global logistics giant the required stimulus to move in on European markets. But the TNT integration was in full swing until the June 2017 cyberattacks hit TNT’s IT (information technology) systems.
FedEx’s management spent considerable time in its fiscal 1Q18 conference call explaining this situation. Notably, FedEx didn’t have the necessary insurance coverage to mitigate the impact of the cyberattacks.
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Analysts’ recommendations on FedEx
Before its fiscal 1Q18 results, 13 analysts had given a “buy” recommendation for FDX stock, but after the fiscal 1Q18 earnings, one analyst changed the recommendation from “buy” to “hold.”
Now FDX has a total of nine analysts (33%) with a “strong buy” recommendation. Of 27 analysts total, 12 (44.4%) have advised investors to “buy” the stock, and the remaining six (19%) suggest that shareholders “hold” the stock.
Analysts’ target price
FedEx has a mean consensus rating of 1.89, indicating an overall “buy” from Reuters-surveyed analysts. The analysts’ 12-month mean target price for the stock is $230.1 per share.
Based on the latest closing price of $216.0 per share on September 19, 2017, FDX stock has a return potential of 6.5%, compared with the following target prices for FedEx’s peers:
- United Parcel Service: 12-month price target of $115.0 per share
- XPO Logistics (XPO): 12-month price target of $70.9, with a return potential of 15.2%
- Old Dominion Freight Line (ODFL): 12-month price target of $102.8, with a return potential of 0.4%
- SAIA (SAIA): 12-month price target of $55.9
Investors open to indirect investments in the US Industrial sector could consider the iShares US Industrials ETF (IYJ). Major industrial companies such as Boeing (BA), General Electric (GE), and 3M Company (MMM) are included in the top holdings of IYJ.
Continue to the next and final part of this series for a close look at FedEx’s valuation.