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Fly News Breaks for December 18, 2019
Dec 18, 2019 | 07:30 EDT
Morgan Stanley analyst Ravi Shanker noted that FedEx's (FDX) Q2 revenue were above his estimate, but not only was its "adjusted" EPS of $2.51 in the press release below his estimate and consensus but it included a 51c gain from a foreign tax loss carry forward. The analyst, who said he is "surprised that an unusual item like this was not adjusted out of numbers," notes that it was likely also included in the below-consesus fiscal year guidance, leaving both of them "optically higher than they should be." Since FedEx's own macro assumptions are largely unchanged from a quarter ago, it is hard for the company to blame its 15% effective fiscal year guidance reduction on further macro deterioration, said Shaker, who thinks it has "everything to do with e-commerce." Since it is hard to argue that UPS (UPS) operates in a different e-commerce environment, Shaker sees FedEx's report having a "meaningful read-across" to UPS, he added. Shanker keeps an Equal Weight rating on FedEx shares but lowered his price target on the stock to $109 from $111.
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