Option Trade 
FedEx Corporation (NYSE:FDX) Calls
  Monday, December 19, 2016

** OPTION TRADE: Buy the FDX JAN 20 2017 200.000 call at approximately $5.20. Place a pre-determined sell at $10.00.

Note: No protective stop losses added -- but if you wish to do so make it $2.10.

by Ian Harvey

Monday, December 19, 2016

FedEx Corporation (NYSE:FDX), which provides a portfolio of transportation, e-commerce and business services under the FedEx brand, is set to report second-quarter fiscal 2017 results after the closing bell on Dec 20.

Last quarter, FedEx - a leading player in the field of global express delivery services - posted a positive surprise of 3.94%. The company has an impressive record with respect to earnings, having surpassed expectations in each of the last four quarters. The average earnings beat is 3.92%.

Shares of FedEx have been on an uptrend in recent times. The stock has comfortably outpaced the categorized Transportation-Air Freight industry over the last three months. The stock gained 22.73% compared with the industry, which advanced just 14.26% over the same period.

It is expected that FedEx will continue its impressive earnings performance. The company is likely to post another beat in the second quarter on the back of its strong product portfolio, which has significantly expanded following the acquisition of TNT Express, earlier this year.

The stock is up 31.5% on the year.

FedEx Corp.’s 50 day moving average price is $186.86 and its 200 day moving average price is $169.93. The firm has a market capitalization of $52.60 billion, a PE ratio of 29.60 and a beta of 1.17. FedEx Corp. has a 52-week low of $119.71 and a 52-week high of $201.57.   

Factors to Consider

Expect FedEx to perform well in the fiscal second quarter on the back of solid performance at its Ground and freight divisions. The inclusion of the products of erstwhile TNT Express should aid the top line this quarter. Following the acquisition, FedEx's scale of operations, particularly in Europe, has expanded a great deal. The expansion of its capabilities has enabled FedEx to compete more effectively with rivals like United Parcel Service Inc. UPS that has a substantial European presence. Although the full impact of holiday season sales will not be reflected in the second quarter, results are likely to be boosted to some extent by the same.

FedEx has made huge efforts to meet the surge in demand.

Analyst Input

FedEx Corp was upgraded by stock analysts at Vetr from a “hold” rating to a “buy” rating in a note issued to investors on Wednesday. The firm currently has a $206.69 price target on the shipping service provider’s stock. Vetr‘s price objective would suggest a potential upside of 4.43% from the company’s current price.

  • Oppenheimer Holdings Inc. reiterated an “outperform” rating and issued a $210.00 target price (up from $184.00) on shares of FedEx Corp. in a research report on Wednesday.
  • Stifel Nicolaus increased their target price on shares of FedEx Corp. from $179.00 to $186.00 and gave the company a “buy” rating in a research report on Wednesday, September 21st.
  • Zacks Investment Research upgraded shares of FedEx Corp. from a “sell” rating to a “hold” rating in a research report on Thursday, September 22nd. Barclays PLC reiterated a “top pick” rating on shares of FedEx Corp. in a research report on Wednesday, September 21st.
  • Finally, BMO Capital Markets reiterated a “market perform” rating and issued a $190.00 target price on shares of FedEx Corp. in a research report on Wednesday, December 7th.

Nine investment analysts have rated the stock with a hold rating, thirteen have given a buy rating and one has given a strong buy rating to the stock. FedEx Corp. presently has a consensus rating of “Buy” and a consensus target price of $191.29.

Harvey’s Options Volatility Indicator

Conclusion

In the event of the company reporting better-than-expected earnings its stock price will be further boosted, thereby continuing its northward movement.    

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

** OPTION TRADE: Buy the FDX JAN 20 2017 200.000 call at approximately $5.20. Place a pre-determined sell at $10.00.

Note: No protective stop losses added -- but if you wish to do so make it $2.10.

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!

Options traders are not successful because they win.

Options traders win because they are successful.

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Back to Option Trades from Option Trade – FedEx Corporation (NYSE:FDX) Calls - Monday, December 19, 201613, 2016



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