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No, FedEx Is Not Amazon's Next Victim

Amazon.com’s (AMZN) announcement last week that it is testing a new delivery service has spurred the latest round of chatter that FedEx (FDX) the parcel shipping giant will become yet another victim to the e-commerce giant’s ever expanding reach.

Cowen analyst Helane Becker insists that those worries are overblown. In a note published today, Becker reiterated her Outperform rating and $ 240 price target on Fed Ex shares, arguing that the company is well positioned to overcome new threats while at the same time improving long-term value for shareholders.

How? Becker says FedEx has a well-proven history of adapting over the decade to various economic environments and along the way, managed to build a powerful brand and enormous scale. Add to that, it has a geographically diverse aircraft fleet, a network of global distribution centers and a commitment to investing in information technology.

Plus, Becker notes there is FedEx’s management team led by CEO Fred Smith since the company’s inception in 1973.

[Smith] has been instrumental in the company’s long term success. Furthermore, Mr. Smith is the largest single shareholder of FDX with ~19.5 MM shares, which equates to more than 7% of shares outstanding. Mr. Smith currently owns more shares than any of the major investment companies, suggesting there is room for increased institutional investment. Looking at the current senior management team each member has been with the company for more than 25 years, and most have a significant investment in FDX.

Now at $ 221.37, FedEx shares are up 0.26% action. The stock fell 2.3% last week to close Friday at $ 220.80 a share.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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