Standpoint Upgrades FedEx to “Buy”; Sees Massive 44% Upside (FDX)

Package delivery giant FedEx Corporation (FDX) on Thursday caught a big upgrade from analysts at Standpoint Research.

The firm lifted its rating on FDX from “Hold” to “Buy” and boosted its price target to $130. That new target suggests a massive 44% upside to the stock’s Wednesday closing price of $89.99.

A Standpoint analyst commented, “We closed out our recommendation on FDX with a 20% gain, +1000 bps versus the S&P on October 21, 2011. The holding period was only one month on that September 22, 2011 recommendation. The shares have underperformed the S&P-500 since our downgrade a year ago. The cost cutting measures announced yesterday were very significant and a game changer. Even if the $1,700,000,000 in cuts are not completely made, and even if there is a slight revenue decline coinciding with these cuts, these moves all but guarantee that FDX will deliver EPS topping $10.00 in 2015-2016. We will reinstate this name to our list of open recommendations with a price target of $130. This would represent a new all-time high; topping the mark reached in 2006-2007 ($120). FDX traded at $120 with a 20X multiple in 2006-2007 on EPS of just $6.00, so our target here of 13X $10.00 is not aggressive.”

FedEx shares rose $1.29, or +1.4%, in premarket trading Thursday.

The Bottom Line
Shares of FedEx (FDX) have a .62% dividend yield, based on last night’s closing stock price of $89.99. The stock has technical support in the $84-$85 price area. If the shares can firm up, we see overhead resistance around the $93-$97 price levels.

FedEx Corporation (FDX) is not recommended at this time, holding a DARS™ Rating of 3.3 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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