FedEx Offers Little Insight Into TNT Express Integration

FedEx Corporation (NYSE: FDX) reported its fourth-quarter financial results after the market closed on Tuesday. EPS of $3.30 and revenue of $13 billion beat estimates by $0.02 and $220 million, respectively. However, the mid-point of its fiscal 2017 adjusted earnings outlook of $11.75 to $12.25 per share fell short of consensus, which stands at $12.17 per share.

Following such mixed results, Citi analysts led by Christian Wetherbee reiterated a Buy rating and $200 price target on the stock, while sharing their take on the earnings call.

Related Link: FedEx Mixed Bag Of Results, Outlook May Leave Investors 'Somewhat Confused'

The outlook may have left investors “somewhat confused about what to expect in the coming 12 months," Citi’s report read. However, what the experts highlighted was the exclusion of TNT operations and integration expenses from the outlook that the management provided. All that FedEx said was that the deal will be accretive in fiscal 2018, something that investors had already heard in previous calls.

“The lack of detail was somewhat disappointing, as the transaction was announced more than a year ago, but herein lies some value,” Citi’s note continued. Taking management commentary into account, the experts now anticipate consensus earnings will be trimmed, “creating an achievable set up fundamentally for the segments and TNT expectations are essentially zero.”

In fact, the analysts concluded they would not be surprised if the stock experienced some feebleness following the call, but added they could still expect stronger performance “as the narrative shifts toward executing on TNT and beating lower hurdles, all with a tailwind from ecommerce.”

At time of writing, FedEx was down 4.07 percent on the day, trading at $157.32.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.