Parcel delivery giant.$FedEx (FDX.US)$Q4 financial report revealed that both profit and performance guidance exceeded expectations. As of press time, the stock rose sharply by 11.80%. Investors are still closely watching the company's assessment of the role of FedEx Freight and potential measures to further release sustainable shareholder value. The assessment is expected to be completed at the end of this year.
JPMorgan raised its rating on FedEx to "shareholding" after learning of the latest financial report. Analyst Brian Ossenbeck and his team believe that FedEx is building a new identity under the leadership of its first CEO, Fred Smith, other than its founder. Ossenbeck pointed out that FedEx attaches great importance to profit growth, capital efficiency improvement, and cost savings throughout the portfolio.
He wrote:"Management has moved faster than expected to implement significant cost reductions and profit improvements in the first stage of the Drive plan, and has entered the second stage, while accelerating the implementation of the Network 2.0 strategy to integrate ground or express facilities."
In addition, he pointed out that in the second year of the Drive plan, FedEx will face more difficulties in improving express efficiency, but the company is currently considering strategic choices for the freight department, all of which are under consideration.
Bank of America reiterated its buy rating on FedEx and raised its target price from $340 to $347, equivalent to 16.5 times the expected EPS in 2025 fiscal year, higher than the midpoint of FedEx's historical range of 12-18 times. BoA believes that the trend of FedEx Freight's structural cost reduction is strong, and its strategic review may release value.
Evercore ISI raised FedEx's target price to $339. Analyst Jonathan Chappell said:"We believe that the key to FedEx's investment theory is to continue to implement its Drive savings plan, smoothly integrate ground or express business, rather than rely on an increasingly uncertain macro environment."
Morgan Stanley is cautious and only raised FedEx's target price from $210 to $215. "We believe that the sharp rebound in stock price today may be the result of the announcement of the strategic review of LTL business, which pushed short positions to cover."said the analyst Ravi Shanker. "We still believe that FedEx's standardized EPS (combined) is close to $15, not $30, and its standardized valuation is close to $200, not $300."
The analyst at the bank, Ravi Shanker, emphasized, "We still believe that FedEx's standardized earnings per share (merged) are close to $15, not $30, and the standardized valuation is close to $200, not $300."