Shares of U.S. shipping giant Federal Express (FDX) - Get Report rose almost 2% in premarket trading on Wednesday after the company said that its outlook is improving as online shopping growth continues to grow.
As expected, the company's FedEx Express unit, which ships smaller and consumer goods, turned in the quarter's best performance as revenue increased 3.4% vs. last year to $6.78 billion, and average daily U.S. package volume rose 1%.
FedEx currently has the highest market share in the express business and is a fierce competitor in the ground delivery business, according to Oppenheimer analysts, who said, "both of which (particularly Ground) are benefiting from an e-commerce tailwind."
FedEx shares were up 1.73% before markets opened Wednesday.
On Tuesday, the company reported that it earned $2.35 a share, on an adjusted basis, in its fiscal third quarter, down 6% from a year ago and below analysts' consensus range of $2.55 to $2.62 a share.
"Relative to consensus each of FedEx's segments underperformed, which was partly offset by a lower tax rate," Oppenheimer analysts told clients in a Wednesday note. The analysts added that "we anticipate reaction to F3Q17 underperformance will be superseded by a favorable response to the aforementioned forward drivers. Our price target increases from $214 to $218 on an increased fiscal 2018 adjusted earnings per share."