FedEx (FDX) Preview and Thoughts

by Dan June 15, 2012 12:18 pm • Commentary


FDX reports their fiscal Q4 earnings Tuesday, June 19th, prior to the open

  • the options market is implying about a 3.5% move, vs the 8 qtr avg move of about 4.5%
  • Wall Street analysts overwhelmingly positive on the name with 21 Buys, 7 Holds and No Sells.
  • Avg 12 month price target compiled by Bloomberg is $107.35, or about 20% higher than current level
  • Short Interest has ticked up a bit to 6 month highs, but only sits at about 2% of the float.

Investor Focus Heading into the Print:

  • Benefits of lower jet fuel costs on earnings
  • visibility on international package volumes
  • color on Express and Fleet  restructuring, and impact on 2013 earnings.


30 day implied vol (red) has been creeping up lately, having caught its 360 day average (yellow). The actual vol (blue) of the stock is much lower:

However, the stock has seen much higher implied vols in the recent past:

The difference between the months is not very significant with July options only differentiating themselves with slightly higher downside skew:

My View:

The stock is about 10.5% from its 10 month high made in February, but has formed a nice base over the last 2 months, holding important support of its 200 day moving average at about $85.

[caption id="attachment_13241" align="aligncenter" width="589" caption="FDX Jan 2010 to Present from Bloomberg"][/caption]


$85 IS A MASSIVE LEVEL dating back to early 2010, to say the least.  When I look at other industrial names with significant international exposure (FDX has about 30% revenue exposure outside U.S.) such as CAT and UTX.

There’s no trade here yet as we’ve been reluctant to enter tons of new positions this week with the Greek elections and all the other unknowns in global markets. It’s very easy to get caught offsides on bad entry points. We’ll revisit this prior to earnings but wanted to get our general thoughts out there.