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UPS Shares Climb, Buoyed by FedEx Fourth-Quarter Beat

UPS shares advanced after rival FedEx beat Wall Street's fourth-quarter forecast.

United Parcel Service  (UPS) - Get United Parcel Service, Inc. Class B Report shares on Wednesday were climbing, buoyed by rival delivery service FedEx  (FDX) - Get FedEx Corporation Report, which beat Wall Street's quarterly expectations.

Shares of UPS, Atlanta, at last check were up 3.5% to $115.02, while FedEx, Memphis, jumped 12% to $157.11.

XPO Logistics  (XPO) - Get XPO Logistics, Inc. Report did not benefit from FedEx's good fortune. Shares of the Greenwich, Conn., company eased 0.5% to $76.89.

FedEx posted stronger-than-expected revenue and adjusted profit in its latest quarter amid the coronavirus pandemic.

The company reported fourth-quarter revenue of $17.4 billion, down from $17.8 billion a year earlier, but topping FactSet’s analyst consensus of $16.4 billion.

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FedEx posted a $334 million loss, or $1.28 per share, narrower than the loss of $1.97 billion, or $7.56 per share, a year earlier. Adjusted earnings per share totaled $2.53 in the latest quarter, blowing away analysts’ prediction of $1.58.

Citi analyst Christian Wetherbee was one of several analysts raising their price targets on FedEx.

Wetherbee, who boosted his target to $170 from $160 while affirming a buy rating on the shares, said in a research note that the strong ground performance suggests FedEx captured share from UPS and demonstrates the success of its independent contractor model at adapting to a big increase in U.S. domestic residential volume.

Morgan Stanley analyst Ravi Shanker raised his price target on FedEx to $100 from $98 after the company's "big beat" in its fiscal fourth quarter. He told investors that the company managed mix and International pressures "much better" than UPS did in its fiscal first quarter.

Shanker said he kept an equal-weight rating on FedEx shares since he estimates normalized EPS remains $10 and thinks "the market is being very generous with the multiple" at this share level.