4. FedEx Corporation (NYSE:FDX)
Average Analyst Price Target Upside as of September 20: 24.69%
PE Ratio (FWD) as of September 20: 12.82
Number of Hedge Fund Holders: 59
FedEx Corporation (NYSE:FDX) has built a remarkable legacy since its inception in 1973, evolving into a global leader in transportation and logistics. With services reaching over 220 countries and territories, it offers a diverse range of solutions, including overnight shipping, freight transportation, and comprehensive logistics services.
FedEx Express has maintained its position as the industry leader in express transportation, thanks to its innovative approach to logistics. It provides worldwide customers with overnight delivery services and international shipping solutions.
FedEx Freight stands out as a key provider of less-than-truckload (LTL) freight services across North America, catering to both businesses and residential customers. Additionally, FedEx Logistics enhances its offerings with a suite of integrated solutions, including air and ocean cargo transportation, customs brokerage, and supply chain management.
In its fiscal 2025 first quarter, the company reported earnings of $3.60 per share on revenue of $21.6 billion, which fell short of analysts’ expectations. While this may raise concerns, it is important to recognize the company’s ongoing initiatives aimed at improving efficiency and reducing costs.
Recently, the company has prioritized consolidation efforts through its “One FedEx” initiative, which merged FedEx Ground and FedEx Services into Federal Express to streamline operations and enhance overall effectiveness. This was complemented by the rollout of Network 2.0, designed to optimize surface operations across the U.S. and Canada.
The company is also embracing technology with initiatives like the DRIVE program, which focuses on data-driven decision-making and cost reduction. The goal is to achieve $4 billion in structural cost savings by the end of the fiscal year.
While current demand has faced challenges due to a slowing economy, some analysts remain optimistic about FedEx’s (NYSE:FDX) future. On September 20, Raymond James analyst Patrick Tyler Brown cut his price target to $310 a share from $330 but maintained a Buy rating. He acknowledged the weak demand and commented that he believes that the cost savings initiatives will eventually pay off.
Baird analyst Garrett Holland echoed this sentiment, describing the recent quarter as difficult but still maintaining a Buy rating. He noted that management’s capability to raise prices could further support profitability despite current demand pressures.
FedEx (NYSE:FDX) has a consensus Buy rating by 30 analysts. The average price target of $317.50 represents an upside of 24.69% to the stock’s last price, as of September 20. It ranks 4th on our list of cheap transportation stocks to buy according to analysts.
Longleaf Partners Fund stated the following regarding FedEx Corporation (NYSE:FDX) in its Q2 2024 investor letter:
“FedEx Corporation (NYSE:FDX) – Global logistics company FedEx was the top contributor for the quarter. Late in the quarter, FedEx reported strong fiscal year results, highlighting a year of strong cost management in a challenging revenue environment. Earnings per share (EPS) increased by 19%, and reduced capital expenditures narrowed the gap between EPS and FCF per share. With the increase in FCF, the company has become a significant share repurchaser, which is a welcome change. The company also announced a strategic review of their Freight segment. Our appraisal has long accounted for the underappreciated value in FedEx’s less-than-truckload operations. A potential spin-off or sale could unlock substantial value, as comparable companies like Old Dominion trade at significantly higher multiples on revenue, cash flow, and earnings than those applied to FedEx Freight by the market and our appraisal today.”
