FedEx (FDX) has entered a multi-year agreement with Nuro to test its autonomous delivery vehicle. The pilot program began in April with parcel deliveries in the Houston area.
Nuro develops self-driving vehicles for package deliveries. It has secured partnerships with leading pharmacy, grocery, and restaurant companies. The FedEx deal marks its first entry into parcel logistics.
For FedEx, the Nuro partnership allows it to explore different applications of autonomous vehicle logistics. For example, it will test appointment-based and multi-stop deliveries.
“FedEx was built on innovation, and it continues to be an integral part of our culture and business strategy…We are excited to collaborate with an industry leader like Nuro as we continue to explore the use of autonomous technologies within our operations,” commented Rebecca Yeung, FedEx’s vice president of advanced technology and innovation.
Nuro hopes the FedEx pilot program will lead to the large-scale deployment of its autonomous vehicles in the logistics giant’s operations.
“This multi-year commitment will allow us to truly collaborate and bring Nuro’s powerful technology to more people in new ways, and eventually reach large-scale deployment,” said Nuro’s head of partnerships, Cosimo Leipold.
FedEx has reached out to Nuro when the rise in e-commerce is accelerating the demand for autonomous solutions across the supply chain. With Nuro, FedEx has added another specialty delivery device to its portfolio. (See FedEx stock analysis on TipRanks)
Bank of America Securities analyst Ken Hoexter reiterated a Buy rating on FedEx stock and raised the price target to $372 from $351. Hoexter’s new price target implies 24.29% upside potential. The analyst hiked the price target after FedEx’s investor relations team shared bullish guidance on volume, pricing, and margins.
“FDX has achieved strong efficiency gains over the past year, with a 21% improvement in stops per hour, a 12% reduction in cost per stop, and a 4% reduction in fixed cost per package in F3Q21,” noted Hoexter.
Consensus among analysts is a Strong Buy based on 15 Buys and 3 Holds. The FedEx average analyst price target of $342.20 implies 14.33% upside potential to current levels.
FDX scores an 8 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
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