Why This Analyst Remains Cautious On FedEx Ahead Of Q2 Results

In a report issued Monday, analysts at RBC Capital Markets shared a preview of FedEx’s second-quarter fiscal 2016 earnings call. The firm is modeling revenue of $12.4 billion and earnings of $2.55 per share, versus consensus of $12.435 billion and $2.53 per share. Moreover, despite being slightly below consensus on the revenue front, the experts believe “there could be downside risk given the softening economy.”

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The research note pointed out a few elements to keep in mind ahead of the earnings call:

• 1. Positive commentary on the peak season, well underway, can be expected.
• 2. Investors shouldn’t be surprised by a reduction in fiscal 2016 guidance – in line with the wider industry.
• 3. Shareholders shouldn’t be expecting any incremental color on the company’s plans to integrate TNT.
• 4. “Pullback in the shares suggests weaker results and guidance baked in.”

Consequently, RBC analysts reiterated a Sector Perform rating and $157 price target on shares of FedEx.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.