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UPDATE: Barclays Downgrades FedEx On 'Stagnant' Profitability

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In a report published Thursday, Barclays analyst Brandon Oglenski downgraded FedEx (NYSE: FDX) from Overweight to Equal-Weight and lowered the price target from $160.00 to $140.00.

Despite the excitement surrounding FedEx's profit improvement plan and share buyback, Oglenski noted the company's "stagnant" profitability. The analyst wrote, "Like other transport transformations, namely Canadian Pacific, we believe true change starts with an organizational culture that measures success in value creation, not just growth. We still view FedEx as a material candidate for long-term profit improvement via consolidation of overlapping network capacity (see our presentation 'FedEx 2.0', May 2013).

"However, with a culture and incentive structure aligned to drive near-term growth at the expense of capital returns, we believe such a transformation at FedEx will take much longer to achieve than we initially hoped."

Barclays added that the management team needs to understand market competitiveness. With large transportation management balancing the finances and interest of customers and shareholders, the analyst highlighted that "actual results will be difficult to obtain."

Shares of FedEx closed at $138.54 on Wednesday. The stock is currently trading at $136.87, down 1.22 percent.

Latest Ratings for FDX

DateFirmActionFromTo
Dec 2016Aegis CapitalInitiates Coverage OnBuy
Dec 2016JP MorganInitiates Coverage OnOverweight
Nov 2016BMO CapitalInitiates Coverage OnMarket Perform

View More Analyst Ratings for FDX
View the Latest Analyst Ratings

Posted-In: Barclays Brandon OglenskiAnalyst Color Downgrades Price Target Analyst Ratings

 

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