CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
Our 12-month target price of $261, cut by $2, reflects a 12x multiple of our FY 25 (May) EPS estimate, in line with FDX’s historical forward average. We lift our FY 24 EPS estimate by $0.09 to $17.78 and trim FY 25’s by $0.20 to $21.72. Feb-Q EPS of $3.86 vs. $3.41, beat consensus by $0.38. Revenues of $21.7B were 1.6% below consensus (and -1.9% Y/Y), so the large EPS beat is on margin expansion via cost cuts. The revised FY 24 EPS guidance range ($17.25-$18.25) leaves the midpoint unchanged, but tightens the range by $0.25 on either end. The Express segment yielded adjusted operating margins of 2.5% (up by 130 bps), but volumes in Express were still down, and volumes were only flat in Ground. We are surprised by the strong reaction today to the EPS beat (+7%), given that it is fully cost driven, and absent of much evidence of a macroeconomic recovery. FDX added $5B to its buyback authorization, which could theoretically allow for about a 9% share count reduction, but we think caution is warranted.