VOL. 124 | NO. 122 | Wednesday, June 24, 2009
Analyst: Lower Expectations Already in FedEx Price
NEW YORK (AP) - Lowered expectations for the current quarter are already reflected in FedEx Corp.'s stock price, and the company's potential for earnings growth once the economy recovers should drive shares higher, an analyst said, upgrading the company.
JPMorgan analyst Thomas Wadewitz hiked his rating to "Overweight" from "Neutral" in a note to investors Tuesday. The package shipper's shares traded up $1.39, or 2.8 percent to $51.44 Tuesday morning. They've changed hands between $34.02 and $96.99 in the past 12 months and are down 22 percent this year.
Wadewitz raised his price target on the stock to $66, implying shares will rise nearly 32 percent from Monday's close in the next 12 months.
FedEx last week said it earned $3.76 per share for its fiscal 2009, down from $5.83 in 2008. Excluding special charges, profit was 31 cents per share.
FedEx also predicted tough times for the rest of the summer, with profit of between 30 cents to 45 cents for its first quarter ending in August, compared with $1.23 last year.
Wadewitz expects FedEx to earn $2.50 per share in its fiscal 2010 year ending next May.
Analysts polled by Thomson Reuters expect, on average, profit of $2.71 per share for 2010.
Furthermore, a possible bankruptcy of trucker YRC Worldwide Inc., whose financial position he calls "precarious," could add another 70 cents per share of profit to FedEx's earnings.
The way FedEx sets up its business means it has more room to grow profit when shipping volumes increase than do competitors such as United Parcel Services Inc., the country's biggest package shipper, the six major railroads and a logistics company such as C.H. Robinson Worldwide Inc., Wadewitz said.
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