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FedEx Using Nuro Autonomous EVs for Deliveries

FedEx (FDX) recently announced a multi-year deal with Nuro to use the latter’s autonomous delivery vehicle for its operations. The addition of Nuro’s next-generation autonomous vehicles expands FedEx’s portfolio of autonomous same-day delivery vehicles and devices.

The partnership deal was initially inked in April, and underwent pilot testing across Houston. The pandemic fueled a massive growth of ecommerce, making reliable and autonomous solutions a necessity throughout the supply chain in order to efficiently meet delivery demands. FedEx expects automation to increase the safety, efficiency, and productivity of more than 570,000 FedEx workers. (See FedEx stock chart on TipRanks)

Rebecca Yeung, vice president, advanced technology and innovation, FedEx, said, “FedEx was built on innovation, and it continues to be an integral part of our culture and business strategy.” She added, “We are excited to collaborate with an industry leader like Nuro as we continue to explore the use of autonomous technologies within our operations.”

Notably, Nuro has been a self-driving technology innovator for nearly five years, and has deployed its autonomous vehicles in a number of cities. The company has also collaborated with with grocery, restaurant, and pharmacy players.

On June 29, Argus Research analyst John Eade reiterated a Buy rating on FedEx but increased the price target to $330 from $305, implying a 10.1% upside potential to current levels.

Eade credited the upside in price target to FedEx’s recent fourth-quarter Fiscal 2021 earnings beat, mid-teen growth projection for fiscal year 2022, and “solid” balance sheet. Further, the analyst said that FedEx Ground is steadily growing as it is focused on margin expansion.

The stock is trading at a reasonable valuation level, even at 12-times its expected FY23 earnings, the analyst added.

Consensus among analysts is a Strong Buy based on 20 Buys, 3 Holds, and 1 Sell. The average FedEx price target of $355.45 implies 18.6% upside potential to current levels.

Additionally, News Sentiment for FedEx is Very Positive, based on 29 articles over the past seven days. All the articles have Bullish sentiment, compared to a sector average of 66%, and none have Bearish Sentiment, compared to a sector average of 34%.

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