FedEx Struggling to Hold Long-Term Uptrend

FedEx Corp. (FDX) reports fiscal Q4 2021 results after Thursday’s closing bell, with analysts looking for a profit of $4.96 per-share on $21.49 billion in revenue. If met, earnings-per-share (EPS) will mark a 96% profit increase compared to the same quarter in 2020 when the world shut down due to the pandemic. The stock took off in a strong advance in March after beating Q3 top and bottom line estimates by wide margins, posting an all-time high near 320 in May.

Amazon Looms Large

The shipping giant has lost ground since that time, caught in the rotation out of economic recovery plays triggered by the slow rollout of vaccines in Europe and parts of Asia. It also topped out just six days after announcing a rate increase, which traditionally triggers higher stock prices in expectations of bigger profits. Rival UPS Inc. (UPS) has impacted buying interest as well, posting modest long-term financial targets that triggered an aggressive sell-the-news reaction.

However, the return of Amazon.com Inc. (AMZN) as a major competitor could mark the biggest hurdle for FedEx in coming quarters. The e-commerce juggernaut abandoned plans to bring deliveries in-house in April 2020 to focus on rapidly increasing market share. However, the company has started to ship cargo for the U.S. Postal Service, raising fears it will move aggressively to take loyal customers from other traditional shippers.

Wall Street and Technical Outlook

Wall Street consensus has improved in the last three months, now standing at an ‘Overweight’ rating based upon 20 ‘Buy’, 3 ‘Overweight’, 6 ‘Hold’, and 1 ‘Underweight’ recommendation. Price targets currently range from a low of $265 to a Street-high $383 while the stock closed Friday’s session just $20 above the low target. This depressed placement suggests that Main Street is more skeptical about FedEx’s long-term outlook than professional analysts.

FedEx ended a strong uptrend at 275 in January 2018 and entered a steep decline that posted a 7-year low in March 2020. The subsequent uptick unfolded in a vertical trajectory, reaching the prior high in October. A breakout into December failed but the stock mounted that peak in May 2021, added a few points, and failed the rally once again at month’s end. It’s now trading just 10 points above the 2018 high, caught in a distribution wave that highlights shareholder frustration.

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Disclosure: the author held no positions in aforementioned securities at the time of publication.