Melius starts FedEx with a Hold, sees more risk than at rival UPS

As previously reported, Melius Research analyst Conor Cunningham initiated coverage of FedEx (FDX) with a Hold rating and $240 two-year price target. FedEx and UPS (UPS) were natural pandemic winners, but with the pandemic tailwinds subsiding, "the companies find themselves at two different points on a similar path," Melius argues. FedEx is "an interesting restructuring story" as it looks to close the gap to UPS on margins with a $5B structural cost reduction plan, but carries more risk, the analyst tells investors. The firm believes there is "credibility to the FedEx cost story," but sees risk in timing to achieve the cost goals set for FY25.