Credit Suisse Cuts Price Target On FedEx

Credit Suisse cut its price target on FedEx Corporation FDX from $179 to $177 after the company missed Q2 expectations. The firm maintained a Neutral rating.

Analysts led by Allison M. Landry lowered their “FY15 [EPS] estimate to $9.00 (from $9.11). Our FY16 and FY17 EPS forecasts decline to $10.82 and $12.42, from $10.92 and $12.52 respectively.”

Landry noted that “FDX kept its FY15 EPS guidance of $8.50- $9.00 intact, while the consensus crept up ~$0.15/sh since mid-Oct to $9.09/sh. As such, estimates are likely to come down modestly for 2H15.”

Landry highlighted how “Management stressed that the current slowdowns at the West Coast ports are a "much bigger deal" than people believe. This contributed to weaker Ground margins in the quarter, as the company saw a traffic shift toward the West Coast ports and East Coast ports and away from the traditional distribution centers in the middle of the country.”

“Given the Q2 miss and the resulting ~4 percent selloff in the stock today, it appears that the market expected a meaningful fuel tailwind in FDX's Q2 and 2015 results. Management indicated that fuel was only a modest net benefit, noting that the decrease in fuel surcharge revenue largely offset the fuel expense tailwind. Indeed, the avg. price per gallon of jet fuel FDX paid in Q2 was down just 8 percent seq. and 10 percent y/y, while spot prices dropped ~30 percent from Sept. through November,” according to the analyst note.

FedEx Corporation recently traded at $171.00 up 1.92 percent.