FedEx Corporation (NYSE: FDX) has warned that there will be a delay in shipments traveling on aircraft as the Omicron variant continues to contribute to staff shortages, the Wall Street Journal reported. Additionally, severe winter storms in the U.S. and at the company’s main air hub in Memphis, Tennessee, have also posed challenges.
Per service alerts generated by FedEx last week, the company said, “The explosive surge of the COVID-19 Omicron variant has caused a temporary shortage of available crew members and operational staff in the FedEx Express air network.”
“The health and safety of our team members is our top priority,” the company added. FedEx is working on contingency plans so that disruptions in services are minimal.
Issues at a Glance
According to the source, Omicron is a highly transmissible COVID-19 variant, impacting everyone across the country. Notably, passenger airlines hit hard by the spread have canceled 1,000 daily flights for 13 consecutive days.
Last year, FedEx had a shortage of staff due to the pandemic and tight labor market. However, higher pay, flexible scheduling, and other incentives were the measures taken by FedEx to retain adequate operational staff to maintain its delivery operations in the season.
Wall Street’s Take
Recently, Argus Research analyst John Eade reiterated a Buy rating on the stock and raised the price target to $285 (7.96% upside potential) from $270.
Eade believes that even though the company’s volume trends are positive, elevated employee costs are diminishing the margins in the near term.
Consensus among analysts is a Strong Buy based on 13 Buys versus 2 Holds. The average FedEx price target of $309.07 implies 17.08% upside potential from current levels. Shares have gained 8.8% over the past year.
TipRanks’ Hedge Fund Trading Activity tool shows that confidence in FedEx is currently Very Positive, as some of the top hedge funds that were active in the last quarter increased their cumulative holdings by 1.4 million shares.
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