FedEx Upgraded at Stifel as Pandemic Boosts Package Traffic

"FedEx has shown it is a winner from this odd pandemic period," Stifel analyst David Ross said, lifting his rating on the stock to buy.
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FedEx  (FDX) - Get Report shares rose Thursday after Stifel analyst David Ross upgraded the Memphis package-delivery giant to buy from hold and raised his price target to $281 from $175.

"The big move in FDX off the lows earlier this year has been warranted ... as the world didn't come to an end, and FedEx has shown it is a winner from this odd pandemic period," he wrote in a commentary cited by MarketWatch.

FedEx shares recently traded at $243.85, up 1.01%. The stock has jumped 61% year to date, as the coronavirus pandemic has sparked an onslaught of package traffic. People stayed home and ordered online for delivery.

Even after the stock’s surge of the past three months, it stands at "an above-average discount" to archrival UPS  (UPS) - Get Report, Ross said.

Morningstar analyst Matthew Young likes FedEx, too, though he says the shares are overvalued. He sees fair value at $193.

“Business-to-consumer volumes are surging, and FedEx's longer-term growth prospects haven’t evaporated,” he wrote in a commentary last week.

“Its extensive international shipping network is extraordinarily difficult and costly to duplicate, global trade will eventually improve, and domestic/international e-commerce tailwinds should remain favorable for years to come.”

The loss of Amazon  (AMZN) - Get Report as a customer won’t hurt FedEx too badly, Young said.

“FedEx continues to bolster its ground and express capabilities and is well positioned as a key provider for the myriad other retail shippers pursuing e-commerce, not to mention its entrenched relationships in domestic and international business-to-business delivery,” he said.

“The TNT integration made headway in the firm's fiscal 2020, and we expect efforts to gradually bear fruit in Europe as FedEx fully integrates all of its ground and express assets there.”