The courier service still reported a loss, but had a better-than-expected quarter ending May 31 as the coronavirus pandemic fueled a jump in home deliveries that drove a 20% increase in revenue for FedEx’s ground-delivery business.
Here are the key numbers:
- Adjusted earnings per share: $2.53 reported, versus $1.52 (expected)
- Revenue: $17.4 billion reported, $16.4 billion (expected)
Following the results, more than a dozen Wall Street analysts upgraded their price targets for FedEx, according to Bloomberg data, seeing further growth ahead for the company even as the economy recovers from coronavirus pandemic-induced lockdowns.
“Revenue growth was above our forecast by almost 3%, with Ground the star of the show as volumes rose by roughly 25% YOY,” said Goldman Sachs analysts led by Jordan Alliger in a Tuesday note. “This far outstripped our high-single digit forecast and is directly related to surge in E-Commerce shipments — demonstrating perhaps that there is significant eCommerce potential outside of Amazon.”
Goldman increased its price target to $169 from $153 and reaffirmed its “buy” rating on FedEx shares.
JPMorgan also boosted its FedEx price target to $188 from $145, and upgraded the company to “overweight,” the equivalent of a “buy” rating.
“FedEx set a more constructive tone on raising the price of capacity in the ‘new normal’ than we expected with holiday peak season surcharges applying to large customers for the first time in three years,” wrote analysts led by Brian Ossenbeck in a Wednesday note.
UPS, which jumped as much as 8% Wednesday, could also benefit if it can follow FedEx’s lead on yields, according to the firm.
FedEx price targets were also upgraded at Morgan Stanley, Deutsche Bank, Credit Suisse, and more. Analysts have an average price target of $165.40 on shares of the company, and 15 “buy” ratings, 14 “hold” ratings, and one “sell” rating, according to Bloomberg data.
FedEx has gained roughly 4% year-to-date.
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