FedEx Stock Flashes Buy Signal On Earnings. Why Wall Street Is On Board.

FedEx stock is breaking clear of a key support level, flashing a buy signal. The company posted better-than-expected fiscal Q3 earnings late Thursday. Analysts are mostly on board, highlighting its market-share gains and package yield, a key industry metric.

FedEx stock — up 26% since the start of the year — had pulled back since war broke out. But management said that it didn’t expect the conflict to have a material impact on current-quarter results, according to a BMO Capital analyst.

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FedEx Earnings

Results: FedEx posted Q3 earnings per share of $5.25 a share, up 16.4% from a year ago and $1.12 ahead of estimates. Revenue growth accelerated to 8.1%, as sales of $24 billion topped estimates by over $500 million.

**Outlook: **FedEx updated its fiscal full-year outlook with just one quarter to go. It now sees a revenue growth range of 6% to 6.5%, up from 5% to 6%. Its full-year outlook range for adjusted EPS jumped to $19.30 to $20.10, up from $17.80 to $19.

FedEx said it’s on track to spin off FedEx Freight into a separate publicly traded company on June 1.

Analyst Comments

BofA hiked its FDX stock price target to 440 on Friday, from 431. It also kept a buy rating, citing FedEx’s “strongest U.S market share gains in 20 years,” according to a note summarized by The Fly investment news site.

Truist highlighted yield strength, volume growth and continued cost execution and hiked its price target to 425 from 400 for buy-rated FDX.

For FedEx, yield is essentially revenue per package, which has grown based on price increases and the change in the type of packages shipped. Truist noted that the mix is shifting toward higher-margin business-to-business packages.

Morgan Stanley analyst Ravi Shanker stood out for his bearishness, chalking up much of the earnings beat to the peak shipping season. He cautioned about earnings volatility and limited visibility, keeping an underweight rating while bumping up his price target to 230 from 220.

In a big-picture note on March 2, Jefferies hiked its target to 450 from 425, saying FedEx is a core HALO stock (Heavy Assets with Low Obsolescence) resistant to AI disruption based on its capital intensive infrastructure that’s “effectively impossible to rebuild from scratch.”

FDX Stock

FDX surged 7.2% to 381.68 Friday morning, leading S&P 500 winners as the market opened. Shares then trimmed their advance to less than 2%.

The stock tested support at the 50-day moving average on Thursday, before closing 2% above the key technical level. Friday’s move, which carried FDX above its 21-day exponential average, broke the downtrend from the Feb. 27 peak, flashing an early entry opportunity.

With the overall market in a pullback and FDX opening around 10% above its 50-day line, investors should limit any additional share buys.

Be sure to read IBD’s The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.

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