Street View: FedEx outlook brightens despite freight and trade headwind

FedEx FDX.N reported quarterly profit and revenue above Wall Street estimates, as cost-cutting and strength in domestic deliveries helped offset weaker international volumes after the U.S. ended tariff exemptions on low-value, direct-to-consumer shipments

Shares of package delivery co rise 5.52% to $239 in premarket trading

PARCELS POP, PRESSURE DROPS

J.P.Morgan ("overweight," PT: $284) expects FedEx to continue gaining volume, driven by share gains from UPS UPS.N in healthcare and home deliveries, and also expects UPS to face continued pressure in the short term, as it deals with Amazon’s AMZN.O reduced volume and updates to its delivery network

Citigroup ("buy," PT: $279) says FDX could still benefit from improved efficiency and pricing; however, it notes that changing economic and trade conditions add uncertainty to how much operating leverage FedEx can unlock.

Jefferies ("buy," PT: $280) says that while FedEx's freight business (LTL) remains weak, U.S. package performance is strong and international results were better than expected, helped by lessons learned earlier in the year

Morningstar (fair value: $237) expects U.S. tariffs to slow economic growth and weaken demand in the parcel industry over the next year. However, FedEx’s domestic revenue outlook suggests that new business wins, such as its growing relationship with Amazon, could help offset those pressures