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Are Analysts More Bullish on FedEx than They Are on UPS?

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Analysts’ recommendations for FedEx

FedEx (FDX) has an average consensus rating of 4.3, denoting a “buy.” Out of 25 analysts covering FedEx (FDX), 17 analysts, or 68%, recommend a “buy” on FDX. Eight analysts, or 32%, maintain “hold” recommendations. The analyst ratings were the same before fiscal 4Q16 results.

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Peer group recommendations

FDX’s archrival United Parcel Service (UPS) has “buy” recommendations from 29.1% of analysts against FDX’s 57.1%. Old Dominion Freight Line (ODFL) has “buy” recommendations from 37.5% of analysts surveyed by Bloomberg. XPO Logistics (XPO) has a “buy” opinion from 66.7% of analysts. Major freight forwarder C.H. Robinson Worldwide (CHRW) has “buy” recommendations from 24.1% of analysts, while Expeditors International of Washington (EXPD) has “buy” recommendations from 16.7% of Wall Street analysts.

Analyst price target

Wall Street analysts have a consensus 12-month target price of $181.5 on FDX’s stock. The stock’s closing price was $159.4 on September 14, which represents a return potential of 13.9%. Investors should note that in the last 12 months, FDX stock had delivered a return of -6.1%.

Among all financial research firms covering FDX, Brandon Oglenski of Barclays has the highest price target of $205.0 with an “overweight” recommendation. He is immediately followed by Kelly Dougherty of Macquarie, who has a price target of $200 on FedEx with an “overweight” recommendation. Ravi Shanker of Morgan Stanley has the lowest price target of $145.0 updated on July 5, 2016, with an “equal weight” recommendation.

Investors should understand that FDX’s business is hard to replicate. Thus, the entry barriers are very strong. The analysts haven’t given much consideration to Amazon’s (AMZN) entry in the parcel delivery market, which directly competes with FedEx and UPS. Plus, TNT’s European network, when combined with FDX’s own network will most likely give the latter a strong foothold in Europe and Asia. Even the Brexit developments are going to take time to bring more clarity.

The iShares Transportation Average ETF (IYT) has a 12% exposure to FDX.

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