On Friday, Stifel, a financial services firm, increased its price target for FedEx Corp (NYSE:FDX) shares to $306 from the previous $290, while maintaining a "Buy" rating on the stock. The adjustment comes after FedEx reported third-quarter earnings for fiscal year 2024 that surpassed market expectations.
FedEx announced adjusted earnings per share (EPS) of $3.86 for the third quarter of fiscal 2024, which was higher than the consensus estimate of $3.43 and slightly above Stifel's own estimate of $3.45. The reported EPS was close to Stifel's January prediction of $3.77, which had been revised down due to concerns about winter weather disruptions and ongoing market softness.
The company's performance in the third quarter marked a significant improvement over its second-quarter results, which had presented challenges. Stifel had previously indicated that FedEx needed to demonstrate more effective execution of cost reductions through its Drive Program.
According to Stifel, the recent quarter's results suggest that FedEx is making progress in this area. Despite a difficult market environment characterized by yield and mix pressure, the company has been able to move forward with its cost-cutting initiatives.
Stifel remains cautious, noting that execution risks persist for FedEx. However, the firm acknowledges the potential benefits from the ongoing restructuring efforts under the Drive Program and the anticipated network enhancements through the Network 2.0 initiative.
Stifel's revised stock price target reflects a conservative stance, but the firm indicates that if FedEx continues to deliver strong quarterly results and effectively communicates its progress, the stock is likely to see further gains.
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