FedEx stock (FDX) did a downtrend channelUptrend and downtrend channel patterns are technical analysis tools used to identify potential future price movements. They are formed by two parallel lines on a chart and can be u... breakout and jumped over horizontal resistanceA horizontal resistance chart pattern is a type of chart which shows how price movement follows a certain pattern when price reaches a certain level. The pattern forms a resistance... on March 17, 2023. On March 9, 2023, the stock confirmed a Resurrection CrossWhen the 50 day moving average crosses above the 200 day moving average, it is called a Resurrection Cross. Conversely, when the 50 day moving average crosses below the 200 day mov... (50 day MA blue line, crossing above 200 day MA red line).
Gap Up In FedEx Stock Is Unsustainable
The upward gap up move in FedEx stock is unsustainable and we may go back to at least partially fill the gap. The first test will be if previous horizontal resistance becomes support off $214.67.
Why Did FedEx Stock Pop Higher?
On March 16, 2023, FedEx (FDX) increased its 2023 guidance after the company’s fiscal third-quarter earnings smashed EPS expectations but missed on revenueThe income statement provides a summary of a company's revenue and expenses over a specified period of time, typically a year or a quarter. It shows the company's total revenue, th... projections.
FedEx reported Q3 EPS of $3.41 versus the consensus estimate of $2.73. The company reported Q3 revenue of $22.2B versus the consensus estimate of $22.74B.
CEO Raj Subramaniam says: “I am proud of the FedEx team, who delivered outstanding service to customers during our peak season while also making solid progress on our transformation initiatives. We’ve continued to move with urgency to improve efficiency, and our cost actions are taking hold, driving an improved outlook for the current fiscal year.”
The company said: “Third quarter results were negatively affected by continued demand weakness, particularly at FedEx Express. In addition, operating income was negatively affected by the effects of global inflation, partially offset by U.S. domestic yield improvement and cost-reduction actions. FedEx Ground operating results improved, primarily due to an 11% increase in revenue per package and cost-reduction actions. These factors were partially offset by lower package volume, higher infrastructure costs and increased other operating expenses. FedEx Freight operating results improved, driven by an 11% increase in revenue per shipment and a gain on the sale of a facility, partially offset by decreased shipments. FedEx Express operating results declined due to lower global volumes, partially offset by a 3% increase in revenue per package. FedEx Express continues to implement volume-related and structural cost-reduction actions to mitigate the negative effect of ongoing demand weakness.”
FedEx Stock Is a Bellwether
FedEx stock serves as a leading indicator of the state of the industrial sector and the outlook for the world economy. By fiscal 2025, the company hopes to save more than $4 billion in annualized structural costs through its Drive program.
One of the first significant corporations to warn about the economy last fall was FedEx. In September, FedEx stock fell sharply after FedEx reported earnings that were below expectations and said that the market had rapidly deteriorated.
During that time, the transportation industry giant made a commitment to change its cost structure, which it claimed would improve its performance in the current environment. FedEx published results on Thursday following the close of the markets, showing that its efforts had been successful.
The company said that ongoing demand weakness, particularly at FedEx Express, as well as foreign currency weakness, had a negative impact on results. In the quarter, FedEx Ground stood out, reporting an 11 percent increase in revenue per package while also profiting from cost-cutting measures.
FedEx price target raised at Barclays
On March 17, 2023, Barclays analyst Brandon Oglenski maintained an Overweight rating on the shares while increasing the price target for FedEx to $280 from $240. In a research note, the analyst tells investors that the quarter exceeded low investor expectations, and the higher guidance should lead to a valuation recovery in the shares going into next month’s DRIVE cost reduction focused meeting. Express still faces problems, which management needs to resolve.
FedEx price target raised at Citi
On March 17, 2023, Citi maintained a Buy rating on the shares while increasing the price target for FedEx to $275 from $250. In a research note, the analyst tells investors that the company’s fiscal Q3 results were obviously better than anticipated and that the outlook is positive. The company believes there is a sizable potential for earnings growth in fiscal 2024 because FedEx reported significantly better Ground results while Express is still operating at or close to trough margin levels.
Is FedEx a buy sell or hold?
Is FedEx good to invest in?
What is the forecast for FedEx stock?
Sees adjusted EPS $14.60 to $15.20, saw $13 to $14, estimate $13.57
Still sees capital expenditure $5.9 billion, estimate $5.91 billion
Behind the EPS boost is the ongoing implementation of the company’s cost-cutting plan which is starting to kick in, helping make up for a decline in shipping package volume due to a slowing economy from rising interest rates.