On Monday, Wells Fargo analyst Allison Poliniak-Cusic downgraded FedEx’s (FDX stock) shares from Buy to Hold and lowered her price objective from $199 to $160.
The new objective isn’t substantially more expensive than the going rate on the market. In early trading on Monday, FedEx stock is roughly unchanged at $152.93 per share. The Dow Jones Industrial Average is up 1.0%, while the S&P 500 is up 0.6%.
Shares are currently down approximately 41% year to date and 25% since a warning was issued in mid-September. The Street was surprised by FedEx around a month ago.
The Economy: A Message from FedEx (FDX Stock). Wall Street hates it.
After the transportation behemoth double-disappointed investors with disappointing quarterly results and retraction of guidance, FedEx shares were in freefall.
Continue reading, revoking its full-year financial forecast, and issuing a warning about declining sales due to the sluggish global economy. The business declared it would reduce expenses to adjust to the changing business climate. As a result, shares decreased 21.4%.
Following recent falls, FedEx stock is now selling at a discount to the market’s 16 times multiple, at less than 10 times anticipated earnings over the next 12 months. However, Poliniak-Cusic notes in her downgrading assessment that “cheap gives comfort, not a trigger.” Poliniak-Cusic predicts further sales losses even if she thinks FedEx’s focus on cost-cutting is innovative. The analyst stated, “We don’t feel the revenue ramifications are properly represented in consensus. According to the corporation, its “new savings perspective asks for a bigger proportion of targeted profits to come from cost reductions, implying less from growth and, by extension, reduced revenue growth.”
While the rest of Wall Street still anticipates some increase, she predicts that FedEx sales will decline over the upcoming year. Poliniak-Cuisc is attempting to mitigate the risk of declining sales projections for the stock.
As a result of the downgrading, 50% of FedEx-related analysts now rank the company’s shares as Buy or higher. The S&P 500’s equities have an average Buy-rating ratio of roughly 58%.
Since the mid-September warning, FedEx stock has already experienced six downgrades, according to Bloomberg. Two-thirds of analysts who follow the firm rated the shares as Buy prior to the warning.
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Author Ivy Palinlin 
