Citigroup cuts its target price
FedEx (FDX) shares fell 3% on March 7 after Citigroup (C) cuts its target price on the stock by $15 to $210. On March 7, Citigroup analyst Christian Wetherbee stated that the slowing global economy, profit headwinds from the TNT integration, and a softer outlook for the Express division might weigh on FedEx’s near-term financial performance.
Citing these near-term issues, Wetherbee lowered the third-quarter earnings estimate on FedEx to $3.05 per share, which is much lower than analysts’ consensus estimate of $3.17.
Wetherbee stated that holding the stock for a near-term gain isn’t feasible for investors. However, he argued that patient investors could be rewarded over the long term.
Analysts’ lower estimates
Analysts have been reducing their target price and earnings expectations for FedEx since December 18—after the company lowered its 2019 earnings outlook due to concerns about a possible global slowdown. During the second-quarter earnings release, FedEx’s executive vice president and CFO, Alan B. Graf, Jr., said, “Global trade has slowed in recent months and leading indicators point to ongoing deceleration in global trade near-term.”
After FedEx’s downbeat 2019 earnings outlook, major investment research firms including JPMorgan Chase (JPM), Credit Suisse (CS), and Morgan Stanley (MS) lowered their one-year target price on the delivery services giant (IYT). The current consensus target price of $222.35 on FedEx is 22.7% lower than the target price of $287.59 on December 17.
The mean estimate for the fiscal 2019 EPS decreased to $16.00 from $17.33 on December 17. The fiscal 2020 EPS estimates fell to $17.97 from $19.84.