FedEx Corporation target price revised to $205 by Citi Research

In a recent report published on Thursday, FedEx Corporation target price has been raised from $200 to $205 by analysts at Citi Research.

On Tuesday, the company acquired TNT Express, following which the research firm reiterated its Buy rating on the stock of FedEx. In the report, the analysts said that FedEx is one of the most compelling stories in Transports.

For the last four years, TNT Express has made consistent loses, so in order to cover its operating expenses, TNT had to sell its assets.

FedEx has made an acquisition deal for purchasing TNT Express for 8 Euros per share. Total worth of the deal is around $4.8 billion. However, it is yet to be approved by the European authorities.

As per the view of the sell-side analysts, Christian Wetherbee, Prashant Rao and Alexander J Hahn, FedEx has a constructive outlook for fiscal year 2016 (FY16) guidance.

The company’s management has full confidence in its profit improvement plan run rate of $1.2 billion by the end of fiscal year 2016 (FY16) and $1.6 billion run rate by fiscal year 2016 (FY16) end.

The Citi analysts have raised their estimations for fiscal year 2016 (FY16) TNT Express earnings before interest and tax (EBIT) to $2.2 billion from $2.1 billion.

Keeping in mind the increase in TNT Express EBIT estimations, the research firm analysts have also raised their earnings per share (EPS) estimate of FedEx to $10.85.

The analysts, in the report, have said that TNT Express will add $16 of equity value to shares but it will take time to realize. According to the sell-side analysts TNT Express will add value to fiscal year 2018 (FY18) earnings per share (EPS) significantly.