Citi is unfazed by FedEx Corp’s (NYSE:FDX) disappointing results and guidance for further weakness.
In a CNBC Interview this morning, Its Analyst Ariel Rosa called the decline of FDX after earnings a “buying opportunity” and said it was a cheap stock to buy at its current level.
Rosa agreed, though, that the name is suitable for investors who are willing to wait, as “it could take some time before earnings start growing.”
FedEx’s stock has fallen by close to 30 percent from its 52-week peak, including today’s drop.
FedEx isn’t at fault for its own weakness
FedEx cut its guidance on adjusted profits for the full year this morning, to $18.60 per share. This is at its highest end. Initially, the transportation giant had set a target of up to $22 per share in its fiscal year 2025.
Citi analyst Ariel Rosa says that the weakening of the outlook is more due to macroeconomic uncertainties than to internal problems.
FedEx is doing a good job. “FedEx has been executing well.”
Rosa advises FedEx shareholders to buy the stock now, as its current price is very affordable.
What is the maximum stock that FedEx could reach in 2025
Citi rates FedEx at “buy”, and expects it to rise up to $305, which is about 25% higher than its current price.
Ariel Rosa, the analyst at CNBC’s firm Ariel Rosa said on Friday that they see value in transportation.
FedEx, however, failed to achieve its earnings expectations in the Q4 of fiscal year 2014. In the fourth quarter, FedEx earned $4.51 per share compared to $4.56 that analysts expected.
Even so, FDX’s sales of $22.2 billion for the last quarter, which experts predicted, exceeded $21.9 billion.
Does FDX make sense to own in the face of recession concerns?
Investors should be aware that while Citi is still bullish about FedEx, the outlook of the company does not take into account the impact tariffs could have on the business.
Ariel Rosa is not the only one on Wall Street who believes in FDX. After the Q4 results, Loop Capital analysts even downgraded FedEx to “sell”.
Investment firm is worried that Trump’s tariffs may eventually cause a recession, and FDX stock is a “really poor recession stock.”
FedEx is “symbolic of global trade”, and he expects that it will be the one to bear the brunt when Trump’s tariffs are met with retaliation by other countries, which could lead to an all-out trade war as early as 2025.
FedEx, however, is currently yielding 2.24% and therefore, it’s more appealing to buy at the current price.
The following post FedEx shares drop after poor earnings: Opportunity or red flag This post may change as the updates unfold
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