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Argus sees long-term value in FedEx

Jul. 06, 2020 2:47 PM ETFedEx Corporation (FDX) StockFDXBy: Clark Schultz, SA News Editor6 Comments
  • Argus Research upgrades FedEx (FDX -0.9%) to a Buy rating from Hold as it points to valuation in comparison to historic levels.
  • "We think that FDX shares are attractively valued at current prices near $155. The shares are above the midpoint of their 52-week range of $88-$178. On a technical basis, they had been in a bearish pattern of lower lows and lower highs since establishing an all-time high of $274 in January 2018, but the stock recently formed a double-bottom, and the trend since then has been higher."
  • Argus uses peer and historical multiple comparisons to value FDX on a fundamental basis, as well as factoring in a dividend discount model.
  • "FDX shares are trading at 13-times our FY22 EPS estimate, below the midpoint of the historical range of 9-20. On a price/sales basis, the shares are trading at a multiple of 0.6, near the low end of the five-year range of 0.5-1.0. The yield of about 1.6% is at the midpoint of the five-year range but below the peer average of 3.5%."
  • Argus derives a price target of $185 on FedEx vs. the average sell-side PT of $165.19.

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