Wells Fargo Adjusts FedEx’s Price Target to $240 From $225, Keeps Equalweight Rating

Wells Fargo Securities has revised its price target for FedEx Corporation (FDX) to $240 from $225, while maintaining its Equalweight rating. The financial services provider noted that the Memphis, Tennessee-based package delivery company has seen a strong start to the year with its Q1 results.

Wells Fargo analysts opined that FDX’s Q1 results exceeded their expectations on the top and bottom lines, and the company also provided an upbeat outlook for the remainder of the fiscal year. The analysts cited that the company’s Express division saw significant improvement in its yields, driven by better pricing, and its Ground division also reported strong growth in its average daily package volumes.

Moreover, Wells Fargo analysts noted that FDX has made considerable progress in trimming costs, which should drive margin expansion in the upcoming quarters. The analysts also added that FDX is likely to benefit from its strategic initiatives, such as the new Residential Delivery Solutions platform.

However, Wells Fargo analysts also highlighted a few risks to FDX’s performance. The analysts noted that FDX has been facing significant headwinds from the ongoing trade war between the U.S. and China, as well as the potential for increased competition from the likes of Amazon and UPS. Additionally, the analysts pointed out that FDX’s Express and Ground divisions are subject to fluctuating fuel prices.

Given the aforementioned factors and the current market environment, Wells Fargo analysts have adjusted their price target for FDX to $240 from $225, while retaining their Equalweight rating.