Wall Street Gives FedEx A Passing Grade After Solid Earnings Report

FedEx Corporation FDX hit a new all-time high of $253.24 after the company handily exceeded Wall Street's expectations in its fiscal second quarter earnings report.

Here is a summary of how some of the Street's top analysts responded to the print.

Bank Of America: Solid Quarter With More To Come

Bank of America's Ken Hoexter maintains a Buy rating on FedEx's stock with a price target boosted from $247 to $293.

FedEx's fiscal second quarter was strong and a 9 percent revenue growth in the Express segment shows it rebounded from the cyber attack, Hoexter said in a note. Meanwhile, an upward revised estimate is attributed to strong global growth and lower than expected fuel expenses from efficiency initiatives. The company also expects the proposed tax reform plan would boost its earnings per share by $4.50 to $5.50, mostly from the revaluation of net deferred tax liabilities.

Citi: Solid Quarter

Citi's Christian Wetherbee maintains a Buy rating on FedEx.

As expected, FedEx reported a "solid" quarter that was highlighted by a 24 percent year-over-year growth in Express' profit, Wetherbee said. A greater than expected tax benefit did account for a 19-cent per share profit boost and other below the line items accounted added to the EPS beat.

"Coupled with a 60c guidance raise and positive commentary regarding the pace of TNT recovery and peak season, we believe the quarter will be a positive catalyst for shares," the analyst said.

Credit Suisse: Momentum Is visible

Credit Suisse's Allison Landry maintains an Outperform rating on FedEx's stock with a price target raised from $278 to $283.

FedEx's earnings reaffirmed multiple reasons to be an owner of the stock over at least the next 12-months, Landry said. These include accelerating global IP momentum, a solid performance in the U.S. domestic package, and incremental profit from tax reform.

While the Ground segment did report weaker than expected margins, it should be noted the segment's operating income growth outpaced revenue growth for the first time in five quarters, the analyst said. As the company pulls back on its Ground capacity investment, it should be able to leverage accelerating volume growth and pricing growth to boost its operating margins.

BMO: Underscores Fundamentals

BMO Capital Markets' Fadi Chamoun maintains an Outperform rating on FedEx's stock with a price target raised from $265 to $270.

There are two major takeaways from FedEx's better than expected report, Chamoun said. The first being strong demand and pricing across all segments, especially in Express, and second, continued muted operating leverage in the Ground unit despite higher than expected revenue. However, investors could reasonably expect the Ground unit to show gradual improvement from fiscal 2019 as planned hub expansions are finalized and operational.

Elsewhere On The Street

• Loop Capital Markets' Rick Paterson maintains a Buy rating on FedEx's stock with an unchanged $260 price target.
• Bernstein's David Vernon maintains a Market Perform rating on FedEx's stock with a price target raised from $212 to $236.

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