FedEx is one of the biggest companies in the logistics industry globally. It operates through several segments, like Federal Express, which provides delivery solutions around the world. This business is supported by over 430,000 employees and 64,000 drop-off locations around the world.Â
FedEx also operates the Freight Segment, which provides LTL freight services, and FedEx Office, which provides printing and shipping expertise to companies in the United States and other countries. It also has the FedEx Logistics division that provides air and ocean cargo solutions.
FedEx’s business has seen elevated demand in the past decade as customers embraced e-commerce. That has led to robust operations, with annual revenue jumping to over $87 billion.Â
The last few years, however, have been challenging for FedEx as its business has slowed and competition from the likes of UPS and Amazon Freight has grown. This explains why its stock has moved sideways and underperformed the top benchmark indices like the S&P 500 and Nasdaq 100.Â
The FedEx stock was trading at $275 on Monday, while the HypeIndex metric rose to 145%.Â
Learn more about the FDX stock here.
Positive hype
The most important positive catalyst the stock has received was its decision about the freight trucking decision. It wants to spin off the company, a move that is expected to unlock about $20 billion in value.Â
The freight business is highly profitable, and analysts expect that it will achieve better margins than its peers like XPO and Old Dominion.
FedEx also wants to merge its ground units and the express divisions in a bid to cut costs and boost efficiency in the company.Â
The company reported mild financial results as its second-quarter revenues fell to $22 billion, down from the $22.2 billion it made in the same period last year. This decline was better than what analysts were expecting.Â
FedEx could benefit from the ongoing weakness in the energy market as the price of crude oil has dropped by over 20% from the year-to-date high. Lower oil prices benefits FedEx because it spends billions on fuel each year.Â
Analysts are optimistic that FedEx will return to growth as business improves. The average estimate is that its annual revenue will rise from $87.90 billion in the current financial year to $91.7 billion in the next one.
The average estimate for FedEx stock by analysts is $325, higher than the current $275.Â
Negative hype
The company could be affected negatively if Donald Trump restarts its trade war in 2025. This is important because FedEx does better when there is free trade globally.Â
FedEx could lose a contract with the USPS, its largest customer, a move that could cost it about $500 million a year.Â
FedEx is facing substantial competition from companies like UPS, Amazon, and DHL.Â
It also has a high debt burden with over $19 billion in long-term debt against $5 billion in cash.
FedEx stock price analysis
The weekly chart shows that the FedEx stock price has formed an ascending channel pattern in the past few months. This channel pattern connects the lowest swings since March 2023 and the highest levels since July of the same year.
FedEx has moved above the 50-week and 100-week Exponential Moving Averages. It also remains slightly below the important resistance level at $298, the highest swing on May 2021.
Therefore, the stock will likely continue rising as bulls target the year-to-date high of $300. The main catalyst for ths rally will be the upcoming spin off of its freight business in 2025.Â
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