Integrated Freight and Logistics giant FedEx has reentered the investors’ radar as the next half of 2024 starts in a few days.
Currently trading at $291, FedEx (FDX) has already raked in gains worth 15.36% in 2024.
However, Tradequotex.com analyst Rahul Nambiampurath believes it might have the legs to reach $550 in the mid-term.
“The Q2 2024 financial report is out, and FedEx’s strategic initiatives and cost-cutting measures have helped maintain stability,” mentions Rahul.
He adds that the slight decrease in EPS from Q1 to Q2 highlights ongoing challenges, but the company’s proactive measures continue to support its bullish outlook.
Fundamental analysis and financial reports
The bullishness surrounding FDX isn’t random. Here are some of the reasons why Rahul feels FDX can be a dark horse for most traders/investors in 2024:
- Successful implementation of cost-cutting measures
- Increased Q2 2024 revenue at $22.20 billion compared to Q1’s $21.68.
- Despite missing analyst estimates for the EPS at $3.99 for Q2 2024, the market reaction remained cautiously optimistic due to the company’s strategic initiatives and dividend increase.
- FedEx announced a 10% increase in its annual dividend rate, reflecting strong cash flow and commitment to shareholder returns.
- The company has plans to repurchase $2 billion worth of its common stock, indicating confidence in future performance.
Rahul mentions that FedEx’s bullish outlook remains despite the slightly weaker Q2 performance. The company has successfully implemented significant cost-cutting measures, reducing structural costs by $1.8 billion, which has positively impacted its profitability and operational efficiency.
FedEx’s plan to repurchase $2 billion worth of its stock also underscores the company’s confidence in its future performance. This signals investors that FedEx is swimmingly managing its challenges and is well-positioned for future growth.
What does the price chart say?
The FDX price chart reveals an interesting formation, especially with the latest gap-up price action. However, the last gap-up opening for FDX didn’t go as expected, as the prices corrected all the way to $242.70, which still remains a strong support zone.
FDX price chart: TradingView
FDX might still be correct in the short term. While the price action is making higher highs, the corresponding RSI indicator is hinting at a lower high and, therefore, a decrease in momentum. However, if this time the price doesn’t fall under $276, another strong support zone, you can expect the bullish phase to continue.
Also, based on the previous swing position, the recent gap-up has formed close to $302, one of the key Fibonacci resistance levels. If the same set of points is followed, the maximum target in the short-to-mid-term for FDX can be as high as $550. However, based on market conditions, multiple corrections can be expected until the price goes that high.
Recently, Bruce Chan, an analyst at Stifel Nicolaus, gave FDX a “Buy” rating with a target price of $550. This rating aligns with Rahul’s technical analysis of the stock.
Also, here is what Scott Schneeberger, Benzinga has to say about FedEx, “FedEx’s earnings beat and optimistic guidance demonstrate its potential to deliver consistent value, making the $550 target achievable.”
