FedEx (FDX.US) shares fell over 1.5% on Tuesday after Citi downgraded the transportation company to neutral from buy and lowered its price target to $225 from $270, citing concerns over the pace of freight activity and pressures to earnings per share growth this year.
“Our call is focused on the potential for macro headwinds to challenge [earnings] growth this year, as the company’s self-help initiatives are more focused on [fiscal year 2024] and beyond,” Citi analyst Christian Wetherbee wrote in his research report.
Wetherbee believes that FedEx competitor United Parcel Service (UPS.US) has better ability to reduce costs and execute during times of economic uncertainty, and suggests a "pair trade," in which he recommends overweighting UPS's stock and underweighting FedEx shares.
FedEx (FDX.US) stock price broke below lower limit of the triangle formation and is currently testing local support zone at $203.65, which is marked with previous price reactions and 50.0% Fibonacci retracement of the upward wave launched in March 2020. Should break lower occur, price may be heading toward April low around $192.25. Source: xStation5
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