On Tuesday, UBS maintained its Buy rating on FedEx Corporation (NYSE:FDX) but reduced the stock's price target to $333 from the previous $340. The adjustment comes as the firm anticipates potential challenges for FedEx in the fiscal year 2025, which may affect the stock's performance leading up to the company's fourth-quarter fiscal year 2024 earnings report.
According to UBS, FedEx is currently trading at a price-to-earnings (P/E) ratio of 12 times based on UBS's revised earnings per share (EPS) estimate for fiscal year 2025.
Despite acknowledging the headwinds FedEx may face in the upcoming fiscal year, UBS suggests that the trend of margin improvement at FedEx could provide support for the stock's value.
The reduction in the price target attributed to a decrease in the estimated EPS for the calendar year 2025. The new EPS forecast is set at $23.80 per share, a slight decrease from the previously estimated $24.30 per share. UBS has applied a 14 times P/E ratio to arrive at the new target price.
The report from UBS underscores the firm's continued confidence in FedEx's stock, despite the lowered EPS estimates and the potential for the investment community to adjust expectations ahead of the company's earnings report for the last quarter of fiscal year 2024. The Buy rating indicates that UBS remains optimistic about FedEx's long-term prospects.
InvestingPro Insights
In light of the recent analysis by UBS, FedEx Corporation (NYSE:FDX) presents a compelling case for investors considering the company's performance and market position. According to real-time data from InvestingPro, FedEx boasts a market capitalization of $62.68 billion, which underscores its significant presence in the logistics industry. The company's P/E ratio stands at an attractive 14.5, which is lower than the 14 times P/E ratio applied by UBS in their price target estimation, indicating that the stock may be undervalued relative to near-term earnings growth.
InvestingPro Tips reveal that FedEx has not only raised its dividend for 3 consecutive years but has also maintained dividend payments for 23 consecutive years. This consistency in rewarding shareholders is a testament to the company's financial stability and commitment to returning value. Moreover, analysts predict that FedEx will remain profitable this year, with the company having been profitable over the last twelve months. Such a track record of profitability and shareholder returns could be reassuring for investors looking for sustainable investment opportunities.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available for FedEx at https://www.investing.com/pro/FDX. These tips further explore the company's stock characteristics, industry standing, and financial health. To enhance your investment research on FedEx, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro, where you can access a total of 7 insightful tips for this stock.
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