FedEx Shares Break $200 Barrier as Market Surges
FedEx shares hit $200 Dec. 13 for the first time, propelled by a stock market surge since the election of Donald Trump.
The Memphis-based company's stock price reached the milestone during intraday trading and closed at $201.02, a $3.38 gain for the day.
FedEx stock has risen about 10% since Election Day, slightly outpacing the market average.
FedEx ranks No 2 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.
It's part of a rising tide in U.S. equities as investors anticipate pro-business moves such as a stimulus plan, lower corporate taxes and reduced regulations.
Analysts had already begun raising FedEx target prices above $200 this week.
At the new closing price Dec. 13, the Memphis carrier's market capitalization — the value of all its shares — topped $53.4 billion. That's a 40% gain from the beginning of the year.
Analysts have been watching the rise. Many expect the climb to continue. Oppenheimer on Dec. 12 raised the 12- to 18-month target price for FedEx to $210 from $184.
Dec. 13, J.P. Morgan initiated coverage on FedEx with a target price of $233 a share and an overweight rating, indicating it's an attractive value for investors.
J.P. Morgan cited network improvements at FedEx Ground, potential gains from FedEx's acquisition of European carrier TNT Express and the company's ability to benefit from an industrial recovery through its less-than-truckload FedEx Freight unit.
FedEx has invested about $2 billion in FedEx Ground since last holiday peak season, adding about 12 million square feet of new sorting space among four major distribution hubs and 19 fully automated stations. The domestic package network is the company's workhorse for carrying growing e-commerce shipments.
RELATED: Avalanche of e-commerce expected to boost FedEx shipping volume this holiday season
In Oppenheimer's research note raising the target price for FedEx, analyst Scott Schneeburger cited expectations for a "strong, well executed peak season for FedEx" and robust growth in e-commerce.
Both FedEx and rival UPS have been going to great lengths to ensure timely deliveries as peak-season volume exceeded forecasts, shipping consultant Satish Jindel said.
"They are even delivering on a Sunday, which is not a service day," Jindel said. "Both have had people out delivering on Sunday."
"The growth is turning out to be a little higher than some retailers had forecast," said Jindel, president of SJ Consulting and ShipMatrix.
Jindel said FedEx reliability was high considering the volume. About 95% of express shipments were on time last week, and 99.9% made it within a day of the target delivery time. "Since people are buying for Dec. 24, even if it takes an extra day or two, they shouldn't be stressing," Jindel said.
UPS ranks No. 1 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.
FedEx shares first broke the $100 barrier in December 2004 but didn't stay there long. The price seesawed up and down through the Great Recession and subsequent recovery before climbing over $100 for good in 2013.
It closed on Election Day eve, Nov. 7, at $180.02, about $5 below a previous record near $185, set in June 2015.
It climbed into record territory within a week after the election and hasn't looked back.
While FedEx chief Frederick Smith has railed against a protectionist trade agenda embraced by candidate Trump, other planks in Trump's platform could benefit FedEx and the transportation sector.
The Dow Jones Transportation Average reached a new high last week for the first time in nearly two years.
Trump has pledged to lower the corporate tax rate to 15% or 20%, from the current 35%.
Smith has called for a corporate tax code overhaul that reduces the rate, as well moving to a territorial tax system from a worldwide tax system that taxes earnings of U.S. companies anywhere in the world.
Trump also has called for reduced regulations on businesses. FedEx is heavily regulated by agencies ranging from Federal Aviation Administration to Federal Motor Carrier Safety Administration.
