(Note: The author of this fundamental analysis is a financial writer and portfolio manager.)
FedEx Corp. (FDX) shares may rise by as much as 15% from its current price around $251 based on the average analyst price target. Analysts have raised their price target on the stock by 17% since mid-December, while increasingly becoming more bullish. Additionally, they have been aggressively upping their earnings estimates for the coming quarter over the past several weeks. (For more, see also: FedEx and UPS Stocks Surge to All-Time Highs.)
The stock has struggled thus far in 2018, with shares down nearly 9% from their highs in January, compared to an S&P 500 that is down by only 5.9%. A technical analysis of the stock chart also supports the potential for shares to rise, and if analysts' estimates and outlook prove to be correct, then the stock could be set to increase over the coming months.
Analysts are forecasting FedEx to climb to an average price target of $287.5, from the stock's current price around $251, an increase of approximately 15%. That price target has been steadily climbing since the middle of December when the average target stood at only $245. Analysts have also become increasingly more bullish on the stock, with 83% of the 29 analysts covering the stock recommending it as a "buy" or "outperform," up from only 72% in the middle of December.
The bullish sentiment in FedEx is a reflection of significant expectations for earnings growth in coming quarters. For the fiscal fourth quarter, analysts have been boosting their earnings' estimates, with analysts raising their outlook by nearly 16% over the last 30 days, and are expecting earnings to climb by 31% to $5.57 per share. Meanwhile, revenue estimates have jumped by nearly 2.5%, and are expected to rise by over 9% to $17.18 billion vs. last year. Analysts are currently forecasting significant growth in fiscal 2019 as well, with earnings expected to grow 16.5% and revenue growth of nearly 6%.
A technical analysis of the chart supports a rising stock price, but more modestly, projecting a rise of only 6.5% to $266. The surge would come if shares of the stock broke out, rising above resistance at $255, sending shares higher to the next level of resistance at $266.
FedEx shares appear poised to rise based on analysts' forecasts for strong earnings growth. Should that happen, the bullish outlook for the stock may prove correct.
Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdings. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.