FedEx Corporation Is The Top Large-Cap Pick Among Baird Analysts

Baird's bullish thesis on
FedEx CorporationFDX
is reinforced by the transportation firm's strong first-quarter earnings, which handily beat the Street's view.

The company's adjusted EPS of $2.90 was above recent $2.79 consensus and Baird's $2.62 estimate, driven by better-than-expected results in both Express and Ground segments.

FedEx also increased its F2017 adjusted EPS guidance to $11.85–$12.35 from $11.75–$12.25 previously. The company also introduced a $750 million synergy target from the TNT deal on a run-rate basis by F2020-end, "reflective of >$1.50/share in synergy and which we believe could prove conservative."

Related Link: Barclays Reiterates FedEx As A Top Pick Following Q1 Results

As such, Baird upped its F2017 EPS estimate to $12.07 from $11.75 and F2018 EPS estimate to $13.31 from $12.89. The brokerage, which has an Outperform rating on the stock, also raised its price target by $9 to $185, which represents potential upside of 14 percent.

"[W]e believe management's recent Express profit improvement program and historical precedent (i.e., Express' performance during 2001 US recession) limit the downside risk to Express EBIT in a recessionary scenario (particularly considering FDX's current valuation multiple)," analyst Benjamin Hartford wrote in a note.

Further, Hartford noted the potential for multiple expansion and sustained outperformance in shares from the progress toward its introduced TNT synergy target and continued growth in the higher-ROIC Ground segment.

At time of writing, shares of FedEx rose 6.23 percent to $172.78.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!
Date
ticker
name
Actual EPS
EPS Surprise
Actual Rev
Rev Surprise
Posted In: Analyst ColorEarningsLong IdeasNewsGuidancePrice TargetReiterationAnalyst RatingsTrading IdeasBairdBenjamin Hartford
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...