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Analysts Lower Estimates for FedEx ahead of Q3 Earnings

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Analysts lowering estimates

In a note to clients, Citigroup analyst Christian Wetherbee on March 7 stated that the slowing global economy, a softer outlook for the Express division, and profit headwinds from the TNT integration might weigh on FedEx’s (FDX) near-term financial performance. Citing these near-term headwinds, Wetherbee has lowered its third-quarter EPS estimate on the stock to $3.05, which is much lower than the Wall Street consensus estimate of $3.17.

Wetherbee also cut its one-year target price on the stock by $15 to $210 and stated that the stock has minimal upside potential in the near term. However, he is optimistic about the company’s long-term prospect and thinks that patient investors could gain substantially over the long term.

Most recently on March 14, Cowen and Company analyst Helane Becker lowered her target price on the stock by $5, as she thinks that FedEx’s International Express business will remain weak.

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Analysts lowered their earnings expectations for FedEx after the company lowered its 2019 earnings outlook on December 18 due to concerns about a possible global slowdown. For fiscal 2019, mean EPS estimates fell to $15.99 from $17.33 on December 17. Similarly, for fiscal 2020, mean EPS estimates fell to $17.96 from $19.84.

Major investment research firms including Credit Suisse (CS), JPMorgan Chase (JPM), and Morgan Stanley (MS) have lowered their target price on the delivery services giant (IYT). The current consensus target price of $222.04 on the delivery giant is 22.8%, which is lower than the target price of $287.59 on December 17.

Analysts’ recommendations

Although analysts have lowered their target price and have revised their earnings estimates downward on FedEx, they have provided a consensus “buy” recommendation on the stock. About 79% of the 29 analysts covering FedEx stock recommended a “strong buy” or “buy.” Meanwhile, 17% of the analysts recommended a “hold,” while 4% recommended a “strong sell” on the stock. Analysts have given FedEx a target price of $222.04, signifying a potential increase of ~24% from its current level of $179.08.

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