FedEx Corp. (FDX) - Get Report shares soared Wednesday after the world's biggest package delivery group posted stronger-than-expected fourth quarter earnings as surge in domestic deliveries offset a sharp decline in business activity during the peak of the coronavirus pandemic.
FedEx said it wouldn't publish a profit outlook for the current financial year, but said adjusted earnings for the three months ending in May were pegged at $2.53 per share, well ahead of the Street consensus forecast of $1.52 per share but down nearly 50% from the same period last year. Commercial-heavy FedEx Express revenues fell 10%.
Group revenues slipped to $17.4 billion but again topped analysts' forecasts of a $16.5 billion tally, as residential volumes rose 72% from last year and higher-margin FedEx ground revenues jumped 20%.
"We said on this call last year that FY '20 would be a year of challenge and change," CEO Fred Smith told investors on a conference call late Tuesday. "Then beginning in January, we began to deal with COVID-19 in China then in Europe and then, of course, in the United States."
"We've made every effort to keep our team members and the public safe as we've dealt with this terrible disease and we're very proud of our team members and the role they played in keeping the global industrial and at-home supply chains open," he added.
FedEx shares were marked 16.3% higher in early trading Wednesday to change hands at $162.91 each. a move that would push the stock into positive territory for the year.
"After what seemed like a marathon of disappointing quarters, FedEx finally delivered some hope for long suffering stockholders when fiscal 4Q20 results including very strong FedEx Ground growth and some evidence of margin stability in the face of surging e-commerce volumes," said Loop Capital analyst Rick Paterson, who maintained his 'buy' rating on the stock.
"Normally this would trigger an uptick in our estimates, but the COVID19 picture has obviously deteriorated recently, resulting in net negative revisions and a slightly reduced price target from $181 to $179," he added.