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Can FedEx Stock Rise after Its Q3 Earnings Release?

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On March 17, FedEx (NYSE:FDX) stock rose 4.94% and closed at $94.96. Based on the last closing price, the company has a market capitalization of $24.8 billion. The stock price has fallen 21.3% in the trailing five-day period, while it has fallen 46.7% in the trailing 12-month period.

Currently, FedEx stock is trading 52.4% below its 52-week high of $199.32 on April 18, 2019. The stock was also trading 7.1% above its 52-week low of $88.69 on March 17, 2020. On a year-to-date basis, the stock has fallen by 37.2% as of Tuesday.

FedEx’s financial performance

On Tuesday, FedEx announced its earnings for the third quarter of fiscal 2020 (quarter ended on February 29) after the market closed. The company reported sales of $17.49 billion with an adjusted EPS of $1.41. The sales rose 2.8% YoY (year-over-year) in the third quarter. Analysts expected the company to post sales of $16.89 billion and earnings of $1.41 in the third quarter. The sales rose despite the coronavirus outbreak. However, the company suspended its guidance for fiscal 2020 due to uncertainty.

According to a MarketWatch report, “We are suspending our fiscal 2020 earnings forecast for our consolidated and segment results due to the uncertainty caused by the coronavirus pandemic,” said FedEx CFO Alan Graf. He also said, “To mitigate these near-term headwinds and position the company for future earnings growth, we are attacking costs throughout the company by managing capacity, retiring our oldest and least-efficient aircraft, integrating TNT Express, and lowering our residential delivery costs by having FedEx Ground deliver FedEx SmartPost and certain day-definite FedEx Express packages.”

Analysts expect FedEx’s revenues to fall by 0.8% in fiscal 2020 to $69.1 billion. The sales will likely rise by 3.0% in fiscal 2021 to $71.2 billion. The adjusted earnings will likely fall by about 34.5% in fiscal 2020 to $10.16 per share. However, the profits will likely rise by 14.2% YoY to $11.60 per share in fiscal 2021.

Analysts revise the target price on FedEx stock

Many analysts decreased their target price for FedEx stock after the third-quarter earnings results.

  • Cowen and Company decreased its target price from $160 to $156.
  • Citigroup decreased its target price from $180 to $140.
  • Stephens decreased its target price from $145 to $135.
  • BMO decreased its target price from $150 to $115.
  • Raymond James decreased its target price from $167 to $150.
  • UBS decreased its target price from $141 to $135.
  • Credit Suisse decreased its target price from $159 to $121.
  • Goldman Sachs decreased its target price from $175 to $153.

According to the latest recommendations from 28 brokerage firms surveyed by Reuters, 14 of the analysts recommend a “buy,” 13 recommend a “hold,” and one recommends a “sell.” Analysts have an average target price of $150.71 on FedEx. The target price implies a return of 58.7% based on the closing price of $94.96 on Tuesday. The consensus target price for the stock declined from $172.52 in February. The lowest target price estimate is $109, while the highest is $360.00.

FedEx’s stock returns

On Tuesday, FedEx stock was trading 25.5% below its 20-day moving average of $127.45. Meanwhile, the stock is trading 34.0% below its 50-day moving average of $143.89 and 36.8% below its 100-day moving average of $150.36. The stock’s 14-day relative strength index score of 28 indicates that the stock is oversold.

FedEx has an upper Bollinger Band level of $175.10. The company’s middle Bollinger Band level is $130.88, while its lower Bollinger Band level is $86.65. On Tuesday, the stock closed near its lower Bollinger Band level, which shows that the stock is oversold.

Currently, FedEx stock is trading at 9.35x its fiscal 2020 estimated EPS of $10.16. The stock is trading at 8.18x its fiscal 2021 estimated EPS of $11.60.

FedEx’s peers also saw increases in their share prices on Tuesday. UPS (NYSE:UPS) and XPO Logistics (NYSE:XPO) stocks rose 11.2% and 9.6%, respectively. The S&P 500 and the Dow Jones Industrial Average rose 6.0% and 5.2%, respectively. Read What’s Warren Buffett’s Plan as US Stock Markets Crash? and Dow Jones Surges after Paring Trump-Era Returns to learn more.

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