Listen For What FedEx Says on Fuel Costs: Analyst

When FedEx reports earnings and holds its conference call Thursday, Jefferies analyst Peter Nesvold will be waiting to hear how fuel costs affected the bottom line.

"Over time, fuel for Fedex , like a lot of other transports, has been passed through" to customers, he told CNBC Wednesday. "However, there is a timing difference of about six weeks between when fuel prices go up and when FedEx recaptures that in the form of higher fuel surcharge revenue."

Fuel has a second, more subtle effect, he added: decreasing customer demand.

"There's a risk of demand destruction, particularly for overnight air express volume, when fuel prices keep going up and the surcharge keeps going up as well," Nesvold said.

Analysts expect the package delivery company to report earnings excluding items of $1.35 a share on $10.62 billion in revenue.

The analyst, who has a hold rating on FedEx, said he'll also be waiting for comments on demands trends, particularly out of Asia. "FedEx's earnings are highly sensitive" in the region and "some of the macro data points out of domestic China have been weak recently."

And he wants to know what FedEx says about competitor UPS's plan to buy Dutch rival TNT.

"I don’t think you’ll see a competing bid out of FedEx," said Nesvold, who also has a hold rating on UPS . "They’ve had a long time to evaluate this. It has been in the pipeline for quite some time."

UPS "struck a great deal," he said. Investing in UPS now means you're "not just playing for an economic recovery, you’re playing it for pretty sizable merger integration savings for the next several years, and that removes the stock from being just a cyclical play."

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