Investors Set To Get A Read On FedEx's 2017

The company delivered EPS beat in the last three quarters. Currently, the Street expects EPS growth of 16.1 percent on the strength of revenue uptick of 19.0 percent.

Barclays believes FedEx stands to gain from e-commerce and termed the stock is going cheap at current levels. Although the brokerage gave a Neutral rating to the industry, its analysts have accorded Overweight rating with $205 as the price target for the stock. This implies upside potentials of about 25 percent.

Related Link: UPS Lifts Rates Ahead Of Holiday Season

The brokerage is ready to give higher multiples but for three issues. They are uncertain on TNT, lack of cash flow and the impact from the initiatives taken by the likes of Amazon.com, Inc. AMZN.

Macquarie Research thinks that TNT could be dilutive to FedEx earnings in the fiscal year 2017. However, its investment on TNT is for the future. Therefore, the brokerage is confident of better results from fiscal year 2018 from TNT to offset the current year weakness. For its part, the company is expected to provide more lights during the conference call of first quarter earnings results.

Meanwhile, FedEx announced that it would hike its shipping rates by an average of 3.9 percent for the domestic, export and import services in the United States. The move comes a few weeks after United Parcel Service, Inc. UPS lifted its ground and freight rates by an average of 4.9 percent. The rate hikes are crucial ahead of the holiday season, and this would have the impact on the outlook for the next two quarters.

At time of writing, FedEx was up 1.19 percent on the day, trading at $163.05. UPS was up 1.37 percent at $108.59.

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