FedEx (FDX) shares are up sharply at the time of writing after the logistics company said that it expects higher profits for its current quarter, which ends on November 30 and includes part of the holiday shopping season. Speaking at the Baird Industrials Conference, CFO John Dietrich said that FedEx’s earnings per share for the quarter will be above $4.05, which is better than the $4.02 analysts were expecting.
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This upbeat guidance gave investors a reason to feel more confident about FedEx heading into the busy shipping period. It also caused shares of competitor UPS (UPS) to rise, even though both companies face some challenges. For instance, FedEx and UPS recently had to ground their McDonnell Douglas MD-11 cargo planes. In fact, Boeing (BA), which makes the aircraft, recommended the move after one of the planes was involved in a deadly crash last week.
Unsurprisingly, these planes play a key role in both companies’ operations. Therefore, taking them offline has raised concerns, as it could create delays and put pressure on shipping capacity, especially during the holiday season. Since FedEx and UPS are the largest cargo airlines in the world, any disruption to their services can impact the overall logistics industry. On top of that, worries about the U.S. government shutdown are adding more uncertainty.
Is FDX Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on FDX stock based on 12 Buys, seven Holds, and two Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average FDX price target of $270.11 per share implies that shares are trading near fair value.
