Trade of the Day: FedEx Set to Deliver Earnings; Is the Stock a Buy?

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FedEx Corporation (FDX) — This package delivery service company is considered by many to be top in its industry, and numerous analysts view FDX stock as undervalued. UBS has a price target of $195 on shares, Citigroup has a $205 target, and analysts at Credit Suisse have an objective of $206.

FedEx is expected to report upbeat fiscal Q4 2014 earnings before the bell this morning. The consensus forecasts earnings of $2.65 to $2.70 per share on a 4% increase in revenue to $12.3 billion. More importantly, the Street is eagerly awaiting management’s guidance for future revenue and earnings.

The company has a history of strong earnings growth and is expected to produce double-digit year-over-year gains for the foreseeable future. S&P Capital IQ estimates EPS jumped 36% to $9.15 in fiscal 2015 and will increase another 20% to $11 in FY 2016.

Its analysts believe reduced pension costs and lower maintenance costs due to the retirement of older aircraft will help profit margins. Revenues should benefit from improved domestic and world economies. Capital IQ has a 12-month price target of $240 on FDX stock, well above other firms.

Since November, FDX stock has been consolidating its 2014 gains in a bullish “V” formation with twin tops at $184-$185. It has support at $180 and its 50-day moving average at $174, and long-term support at its bullish support line and 200-day moving average at $170.

Traders should attempt to buy FDX stock at Tuesday’s low of about $180 for a trading target of $195. Long-term investors can buy FDX stock up to $185, but I wouldn’t chase it on a big gap up.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/06/fedex-corporation-fdx-stock-trade-of-the-day/.

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