Street View: FedEx keeps its engine running despite heavy cargo

Parcel delivery company FedEx FDX.N said it was planning for $175 million in unexpected peak-season costs to find trucks and planes to move goods that would have flown on its MD-11 cargo plane fleet that was grounded after a deadly UPS crash last month

Co reports fiscal second-quarter profit and revenue above analyst estimates on Thursday, lifting low end of full-year earnings outlook on peak-season pricing and cost-cutting efforts

Shares fall 1.4% to $283 premarket

COST BUMP AHEAD

J.P. Morgan ("neutral," PT: $294) expects FedEx’s stock to react neutrally to Q2 earnings beat and full-year guidance increase, as impact from retiring MD-11 aircraft will be felt more in Q3

Morgan Stanley ("underweight," PT: $210) says new business wins in healthcare and auto drove nearly half of FedEx’s Q2 growth, offsetting international volume pressure and MD-11 drag

TD Cowen ("buy," PT: $313) expects 2H margins to face pressure from MD-11 grounding costs

Jefferies ("buy," PT: $326) sees well-defined cost headwinds in 2H, though argues Q2 is clear proof of what FDX can deliver once challenges pass