FedEx Still a ‘Buy,’ Despite Lowered Outlook: Analysts

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FedExshares still have room to climb, despite the fact that the package-delivery giant slashed itsfiscal 2013 profit outlook, two analysts said Tuesday.

“From a long-term perspective, I think FedEx is going to be able to figure out how to restructure operations to really drive a better outcome overall and leverage where the growth is in the networks so I would be sticking with the stock,” said Brandon Oglenski, a transportation analyst at Barclays.

Earnings for the just-ended first quarter were dragged down by the company’s express division, where operating earnings fell 28 percent, as consumers are proving less willing to pay higher prices to ship things quickly.

Despite the continued consumer trend of trading down to less expensive services, Oglenski told CNBC’s “Squawk on the Street” that he has a “buy” rating on the company’s shares, along with a $107 price target.

FedEx is not the only package-delivery company to cut its full-year outlook in recent months. In late July, rival United Parcel Service cautioned that lagging global economic growth would hamper its earnings during the next year.

Jim Corridore, an analyst at S&P Capital IQ, is also optimistic. He has a “strong buy” rating and a $122 price target on the company’s stock.

“I don’t think what you’re seeing is a long-term shift to ocean from air,” Corridore said. “I think what you’re seeing is the global macroeconomic picture in China, in Europe, in the U.S. is not as strong as earlier was expected.”

Corridore expects this trend to shift back once the economy rebounds.

If the economic outlook does improve, either domestically or globally, Corridore said he thinks the company has a “great deal” of operating leverage to grow its profit margins.

“The stock is still trading well below the low end of its historical range,” he said. “It’s trading below the market. We think this is a bellwether company that has its thumb on the pulse of what’s going on in the economy.”

—By’s Katie Little;Follow Her on Twitter @katie_little

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Brandon Oglenski does not own FedEx shares. S&P Capital IQ and/or one of its affiliates has performed services for and received compensation from FedEx during the past 12 months.