FedEx Corporation (NYSE: FDX) shares have weakened from their record highs above $319 registered in May 2021, and the current price stands around $292. The risk of further decline is still not over, and if the U.S. stock market enters a more significant correction phase, the share price could be at much lower levels.
Fundamental analysis: FedEx expects strong momentum in the 2022 fiscal year
FedEx shares continue to trade below the $300 resistance even though the company reported better than expected fourth-quarter results in June. Total revenue has increased by 29.9% Y/Y to $22.6 billion, while the GAAP EPS was $6.88 (beats by $1.94).
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The revenue growth was primarily driven by the strong increase in business-to-business shipments and a 14% rise in revenue per package. Operating income rose 9% Y/Y to $1.97 billion during the quarter, and the company expects earnings per share to be between $20.50 to $21.50 for the 2022 fiscal year.
“We expect continued strong momentum in fiscal 2022, and our investments are focused on the areas of greatest growth and highest returns, like e-commerce, to position us for sustained long-term growth in earnings, cash flows, and returns,” said CFO Michael Lenz.
This month FedEx announced plans to invest $100 million in SoftBank-backed Indian logistics firm Delhivery, which will unlock India’s international trade potential. FedEx and Delhivery will enter into a long-term commercial agreement, and according to this agreement, FedEx will be responsible for international export and import services while Delhivery will focus on selling FedEx Express’ international products and services in India and also provide delivery and pick-up services across the country.
FedEx’s 1% dividend looks safe, and the company’s management remains very optimistic about the upcoming quarters in terms of growth which is certainly positive for shareholders. FedEx trades at less than eight times TTM EBITDA, and with a market capitalization of $78 billion, shares of this company are fairly valued.
Technically looking, FedEx shares could fall below the current price levels in the upcoming weeks, especially if the U.S. stock market enters a more significant correction phase.
Technical analysis: $280 represents the strong support level
The critical support levels are $280 and $260; $300 and $320 represent the current resistance levels. If the price falls below $280, it would be a strong “sell” signal, and the next target could be around $260. On the other side, if the price jumps above $300 resistance, it would be a signal to trade FedEx shares, and the next target could be around $310.
FedEx expects strong momentum in the 2022 fiscal year, and with a market capitalization of $78 billion, shares of this company are fairly valued. Technically looking, the risk of further decline is still not over, and if the price falls below $280 support, the next target could be around $260.
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