Market News

FedEx To Levy Surcharge On Residential Deliveries; Street Sees 32% Upside

FedEx will levy a new surcharge on shipments for residential delivery by its large customers. Shares of the delivery giant closed 1.5% lower last Friday.

FedEx (FDX) said that starting Feb. 15, it will be adding a $0.30 fee per package for shippers whose weekly average volume crosses over 30,000 packages between Jan. 4 and Jan. 31. The move could help FedEx offset rising operating costs amid a surge in volumes due to the coronavirus pandemic.

FedEx said that the fees will be levied on FedEx Ground and FedEx Express domestic residential packages. It will not apply on FedEx One Rate and FedEx SmartPost packages. (See FDX stock analysis on TipRanks).

On Dec. 30, 2020, Argus Research analyst John Eade raised the stock’s price target to $305 (20.8% upside potential) from $270 and reiterated a Buy rating. In a note to investors, Eade said that the company’s balance sheet is healthy and looks good on technical basis. The analyst also believes that the Covid-19 impact on FedEx’s Express and Freight businesses has reversed and it is benefiting from continued growth in e-commerce market.

From the rest of the Street, the stock scores a cautiously optimistic outlook, with the analyst consensus of a Moderate Buy based on 15 Buys, 4 Holds and 1 Sell. The average analyst price target of $332.71 implies upside potential of about 31.7% to current levels. Shares have gained 58.7% over the past year.

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