FedEx stock still has another 25% upside – analyst forecasts

Shares of FedEx Corp (NYSE: FDX) will likely climb further in the coming months even though they have already gained about 50% this year, says an HSBC analyst.

The bull case for FedEx stock

Prash Jain assumed coverage of the delivery giant this morning with a “buy” rating and said its shares had upside to $330 – up another 25% from here.

The analyst is convinced that cost saving initiatives the management launched earlier this year will continue to be a tailwind for the FedEx stock.

We think its Drive and Network 2.0 transformation should set it on a path to narrow the operating margin and valuation gap with UPS.

Last week, the New York listed firm cited those programmes as it raised its profit outlook for the full year (find out more).

Parcel volume growth to remain weighed

Jain warned of subpar growth in parcel volumes in the coming years due to macro challenges. He sees single-digit growth on that front in the next five years versus double-digit growth before the COVID pandemic.

But FedEx will likely be able to offset that weakness with cost cuts, the HSBC analyst added. The multinational already saw its monthly volume (international) turn green in June.

The transportation giant may also have benefitted from the labour issues at peer UPS as well as Yellow Corp filing for bankruptcy last month.

FedEx stock currently pays a dividend yield of 1.89% that makes up for another good reason to have it in your investment portfolio.