uploads/2017/12/ANR-4.png

FedEx Analysts: Why They’re Recommending a ‘Buy’

By

Updated

Analysts’ recommendations for FedEx

Let’s take a look now at analysts’ recommendations for FedEx (FDX) and its peers. FedEx has a mean rating of 2.07, which reflects a “buy.” Of the 29 analysts covering FedEx, eight (27.6%) have recommended a “strong buy” for the stock. Thirteen (45%) have recommended a “buy,” seven (24.1%) have given it a “hold,” and one (3.5%) has recommended a “sell.”

Analysts’ price targets for FDX and its peers

Analysts have a 12-month price target of $242.10 for FedEx stock. Based on the closing price of $239.50 on December 12, 2017, that represents a return potential of ~1.5% over the next year. FDX has returned 19.3% in the last year. Let’s look now at analysts’ price targets and return potentials for FedEx’s peers:

  • United Parcel Service (UPS) has a price target of $122.50 with a return potential of 3%.
  • Old Dominion Freight Lines (ODFL) has a price target of $120.80 with a return potential of -7.2%.
  • YRC Worldwide (YRCW) has a price target of $17.50 with a return potential of 20.4%.
  • XPO Logistics (XPO) has a price target of $83.20 with a return potential of 9%.

Inside the ‘buy’ ratings for FedEx

Recently, Goldman Sachs’s (GS) equity research analysts published a sector-wise outlook for 2018. In the transportation and logistics space, they clearly recognized FedEx, UPS, and XPO as gainers. That’s probably due to the strengths in the logistics and consumer businesses across the United States and expected momentum in the world economy. Note that the financial results for these companies can be the harbingers of economic activity inside and outside the United States.

In recent years, FedEx has invested billions of dollars in state-of-the-art technology, better sorting, and an improved hub-and-spoke network. The company seems to have geared up well ahead of its rival UPS when it comes to riding the e-commerce sales wave. FDX has a good track record of delivering on time, consistently, and without any service issues, unlike its competitors. That could place the company ahead in the highly competitive courier industry (XTN).

Current developments in electric truck technology could act as a major catalyst for the trucking industry, including the big parcel delivery companies. Tesla’s (TSLA) launch of its electric semi truck could be a game-changer for FedEx and other transportation companies. Morgan Stanley (MS) noted that Tesla could possibly reach out to logistics majors such as FDX and XPO to test its electric trucks.

More From Market Realist