FedEx gave stronger-than-expected fiscal 2023 guidance late Thursday after narrowly missing revenue and earnings views for the fourth quarter. FedEx stock jumped Friday, topping a long-term technical level.
"The stronger FY23 EPS outlook underscores management's confidence in executing on revenue quality, margin expansion, and capital allocation priorities," Garrett Holland, a Baird analyst wrote in a June 23 note.
"Near-trough valuation reflects the low bar for performance, yet FedEx is set to deliver better relative growth over the next few years," Holland added. The analyst rates FDX stock at outperform with a $300 price target.
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FedEx Earnings
Estimates: Analysts polled by FactSet expected FedEx earnings to jump 37% to $6.88 per share as sales rise 8% to $24.501 billion.
Results: FedEx earnings rose 37% to $6.87 a share with revenue up 8% to$24.4 billion.
Outlook: FedEx gave 2023 EPS guidance of $22.50-$24.50. Analysts were expecting $22.21, up 7.8% year over year, FactSet says.
"As we move forward, our focus will be on revenue quality and lowering our cost to serve," CEO Raj Subramaniam said in an earnings release late Thursday.
FedEx Stock
Shares of FedEx rose 6.7% to 243.41 in huge volume on the stock market today. FDX stock surged well above the 200-day moving average, which it has been straddling for days. Rival United Parcel Service rose 2.6% Friday. Amazon.com gained 3.6%.
FedEx stock topped the 200-day/40-week averaged on June 15 for the first time since August 2021, after announcing shareholder-friendly moves. The 50-day/10-week averages remain below the 200-day/40-week lines.
The relative strength line for FDX stock is improving within a multiyear downtrend.
Delivery Giant FDX Hikes Dividend
On June 14, FedEx announced a 53% dividend hike and three new board members, following a push by an activist investor.
Amid the rapid rise in inflation, FedEx plans to lower capital spending as well.
Edward Jones analyst Matt Arnold called the changes a positive step. He awaits details on the strategic direction and capital allocation at FedEx's June 29 investor day.
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Both FedEx and UPS have dealt with industry changes as customer Amazon grew into a fierce delivery rival. Meanwhile, FedEx's growing e-commerce business has weighed on margins.
A slowdown in Europe could set back the TNT business, acquired in 2016. Amazon and FedEx stock are both well off highs set in 2021. UPS stock is about 24% below its February high.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
