FDX

The U.S. shipping giant experienced long lingering effects of a moderate weakness in previous global trade estimates, which prevented the logistics company's shares from keeping their price at its heights during the next three months after surging to $290+ in mid-March. Further retracement led the stock to below $250. Nevertheless, FedEx made a new attempt to step out from a temporary suspension between its own sky and earth by adding more than 15% in after-hours trading this Tuesday night, with testing levels around $295 per share for the first time since summer 2021 in the pre-market quotes on June 26. A better-than-feared outlook for the rest of 2024 and for fiscal 2025, as well as FedEx's plans for a $2.5 billion share buyback, helped to improve the market's way of seeing the company's prospects. The official announcement by FedEx management said its EPS (equity per share) range might shift to between $20.00 and $22.00, compared to the midpoint for the next year at $20.85 in consensus forecasts of the Wall Street analyst community. Its CEO Raj Subramaniam marked four consecutive quarters of expanding operating income and margin despite a "challenging revenue environment". Its last quarter's EPS reached $5.41 against $3.86 in the previous three-month period and $4.94 in the same season of 2023, while FedEx sales stood at $22.1 billion, a little above $21.9 billion in the same quarter last year and consensus bets of $22.05 billion on average.

Historically, the revenue peaked at $24.4 billion in the March 1 to May 31 quarter of 2022, yet the company said its "strategic initiatives" like FedEx's DRIVE program aiming at reduced structural costs led to improvements in operating income and margin effectiveness. The company now sees a "low-to-mid single-digit" percent revenue surplus YoY for 2023-2024 through achieving $2.2 billion in permanent cost reductions via its DRIVE program by creating the "world’s most flexible, efficient, and intelligent network". When rivals like United Parcel Service (UPS) are also struggling with slow-growing demand for parcel shipping, FedEx achievements look very solid amid the current environment.

FedEx Ground operating results increased due to higher yield, lower self-insurance costs and growing commercial volume. FedEx Freight improved due to a more effective cost management, with loudly announced plans of further optimization and matching capacity with demand through the closure of seven facilities. Meanwhile, FedEx Express operating results slowed due to lower global yields, which were partially balanced by reduced structural costs and better domestic package yields in the US. The FedEx Express subdivision permanently retired certain aircraft and related engines as part of its fleet modernization program.

These stocks are unlikely to become the new market favorites along with some AI-based techs, yet we may consider refreshing FedEx's all-time highs above $320 per share as the baseline scenario for this year, meaning at least a 12% upside potential, which could be described as a minimum program.