Citi Spent Time With FedEx Execs; Here's What Happened

In a report published Thursday, Citi analysts maintained a Buy rating on

, while raising the price target from $200 to $205, following a meeting with the company's IR. The analysts are now more optimistic about the company's F16 guidance as well as pricing this calendar year and during the Holiday season. Although investors have focused on the TNT acquisition this week, "some of the most interesting takeaways were management's comments around pricing and the intermediate to long-term trajectory of the business even before factoring in TNT," the analysts said. The EPS estimate for F16 has been raised by 15c to $10.85 to reflect upward revisions both in the Express EBIT to $2.2b and in the pricing expectations for the Holiday season this year. In the report Citi noted, "We believe TNT adds ~$16 of equity value to shares, but with some integration risk and a longer ramp up for accretion it will take time to realize…With TNT expected to add meaningfully to F18 EPS, when Express improvement slows, we see 3+ years of double digit growth beyond F15E's 32%." "We reiterate our Buy and believe FedEx is one of the most compelling stories in Transports," the analysts added.