FedEx (NYSE: FDX) shares have advanced from $88 above $300 since March 2020, and the current price stands around $254. Wall Street is still bullish on FedEx, and the stock price could advance again above the $300 resistance.
Fundamental analysis: FedEx expects earnings growth in the second half of fiscal 2021
FedEx Corporation is an American multinational delivery services company that is well known for its overnight shipping service and pioneering a system that could track packages. FedEx is also one of the US government’s top contractors, and according to analysts, the company could benefit under a Biden administration as the new stimulus program could lead to a substantial increase in government orders.
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FedEx continues to expand its business, and the company introduced changes that will include a $0.30 per package surcharge for the company’s largest customers. FedEx reported FQ2 results at the beginning of December; total revenue has increased by 19.1% Y/Y to $20.6B while Q2 GAAP EPS was $4.55 (beats by $0.60).
Total revenue has increased above the expectations (+$1.15B) while the adjusted operating margin remains steady at 7.4%. FedEx did not provide the fiscal year 2021 EPS outlook, but analysts expect improvements.
“While the overall environment remains uncertain, we expect earnings growth in the second half of fiscal 2021 driven by the anticipated heightened demand for our services as we continue to execute on our strategic priorities,” said CFO Michael Lenz.
Bank of America is optimistic about FedEx, but BofA lowered its price objective on FedEx to $346 from $350. This is still much above the current price and 19.5X multiple on the revised FY22 EPS estimate.
Argus assigned a buy rating on FedEx this January and raised its price target to $305 as the company has an attractive valuation by EPS estimate.
“FDX shares are trading at 14-times of our FY22 EPS estimate, below the midpoint of the historical range of 9-20. In our view, the shares are still trading at attractive valuation levels, even after running up from $88 in the 2021 year, and are more than 10% below their all-time high,” said an analyst from Argus.
FedEx shares could advance again above the $300 resistance if the US stock market doesn’t enter a correction phase.
Technical analysis: The important resistance level stands at $280
The critical support levels are $240 and $200; $280 and $300 represent the resistance levels. If the price jumps above $280, it would be a signal to trade shares, and the next target could be around $300, but if the price falls below the $240 support level, it would be a firm “sell” signal.
FedEx shares could advance again above the $300 resistance if the US stock market doesn’t enter a correction phase. Argus assigned a buy rating on FedEx and raised its price target to $305, while Bank of America lowered its price objective to $346 from $350.