Benzinga - by Lekha Gupta, Benzinga Editor.
HSBC analysts Parash Jain, Deepak Maurya and Bruce Chu initiated coverage on FedEx Corp (NYSE: FDX) with a Buy rating and a price target of $330.
The analysts are bullish on the company's effort to lower costs and believe even partial success can be highly rewarding for shareholders and accelerate adjusted operating margins to 8.4% by FY26.
In particular, FedEx expects to curb expenses by $6 billion by FY27 by deploying One FedEx, Drive, and Network 2.0 cost-saving initiatives.
They estimate FedEx to decrease the EBIT margin gap with its peer, United Parcel Service Inc (NYSE: UPS), by integrating ground and express delivery networks.
According to the analysts, the capital expenditure intensity is projected to decline to below 6.5% of revenue from 8% earlier as aircraft fleet renewal is nearing completion and ground capacity is sufficient for coming years.
The analysts estimate that FY24 adjusted EPS of $17.26 is below the mid-point of the company's guidance range of $17.0-$18.5, with consensus above the mid-point at $18.02.
Also Read: How FedEx Made 'A Solid Start to FY24': Analysts Dive Deeper Into Print, Guidance
They estimate adjusted EPS of $22.25 (consensus: $22.10) for FY25 and $25.37 (vs. $25.06 street view) for FY26.
Also, they see an adjusted operating profit CAGR of 15% in FY23-FY26, led by volume improvements and market share gains in small parcels and freight business.
Also Read: Fed Holds But Signals Hawkish Path Ahead, Treasury Yields Rise: The Week In The Markets
Price Action: FDX shares are trading lower by 0.50% at $263.60 on the last check Monday.
Latest Ratings for FDX
| Mar 2022 | JP Morgan | Maintains | Overweight | |
| Dec 2021 | JP Morgan | Maintains | Overweight | |
| Dec 2021 | Deutsche Bank | Maintains | Buy |
View the Latest Analyst Ratings
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