27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
Multiple concerning metrics impacting FedEx Corporation (NYSE:FDX) are "valid," but the bullish case for the stock can is still justifiable, according to Credit Suisse.
The Analyst
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Analyst Allison Landry maintains an Outperform rating on FedEx with a price target lowered from $307 to $263.
The Thesis
FedEx's outlook has diminished as of late due to signs of a slowdown in global economic growth, while the timing of the announcement of Express CEO David Cunningham's retirement comes in the middle of the peak shipping season, Landry said in a Wednesday note. (See her track record here.)
The more logical conclusion from recent woes is that investors can "kiss good-bye" the prior Express operating income guidance of $1.2 to $1.5 billion in 2020 and a path to $20 in EPS at the same time, the analyst said.
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FedEx shares are now pricing in $16.20 in EPS in fiscal 2019 and $18.30 the next year, which implies a valuation of less than 12 times 2019 consensus estimates and 10.5 times 2020 estimates, Landry said. The recent drop in the stock and lower valuation creates a "tactical long opportunity" due to "relatively limited" further downside potential, she said.
Credit Suisse's revised $263 price target is based on the following:
- A 2019 EPS estimate of $17.06.
- A tax rate of 25.5 percent.
- Mid-to-long-term EBIT growth of 4.5 percent per year.
- A return on incremental invested capital of 40 percent.
- A discounted rate/required return of 8.95 percent.
Price Action
FedEx shares were trading slightly higher at $189.69 at the time of publication Wednesday.
Related Links:
FedEx's 'Messy' Start To Fiscal 2019 Pressures The Stock, Morgan Stanley Says After Q1 Print
Trying Out A Transportation ETF
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.