FedEx Corporation (NYSE:FDX) — This large-cap provider of guaranteed domestic and international air express delivery to businesses and residences is entering its most active quarter of the year. FedEx forecasts revenues to grow 19% in FY 2017 (May), which includes the acquisition of TNT Express, plus an additional 5% growth in FY 2018.
During the holiday season, Standard & Poor’s expects FedEx to increase volumes, reduce pension expenses, and lower maintenance costs due to the retirement of older aircraft — all benefiting a positive earnings picture. And the continuation of a stock repurchase plan should lower FDX’s share count with a positive impact on earnings. Online sales are expected to continue to grow, now making up 50% of all retail sales, and increasing into FY 2018.
The consensus average estimated earnings for FY 2017 is $12.14, and for FY 2018, it is $13.61. S&P has a price target for the stock at $200, which is 16.5 times next year’s estimated EPS, compared to a historical range of 9 to 34 times earnings.
A nice note: S&P gives FDX stock its highest ranking, a five-star “Strong Buy.”
FDX Analysis
After meandering for over a year between $120 and $165, FedEx stock broke out into a new uptrend in September. The breakout, which included a breakaway gap at $164.13 to $170.61, propelled the stock through its 50-day moving average to an annual high at over $177 before succumbing to profit-taking.
The next immediate support is at the 50-day moving average at $168, and then the support line at $165.
Traders and investors should attempt to buy FDX at $168, with a target of $200 for a proposed return of almost 20%.
