NEW YORK (AP) -- The string may have run out in the air cargo market, Citibank said Monday, which cut its FedEx Corp. earnings estimates for this year and next.
After several months of strong trends in air cargo and some optimistic demand comments from FedEx's larger rival UPS, recently released data from October "seems to indicate that the air freight market has lost momentum," Citi analyst Christian Wetherbee said. UPS is the world's largest package delivery company, but FedEx operates a larger air operation.
He cut his earnings estimates for 2013 and 2014 by 5 percent, mostly due to weaker than expected volume growth and lower anticipated margins in its core Express business. FedEx's fiscal year runs from June to May. Wetherbee also cut his price target on the stock by 5 percent to $103.
But the analyst maintained a "Buy" rating, FedEx's massive restructuring plan likely to drive growth in fiscal 2014 and beyond. Growth in its ground shipping business, which accounts for about 60 percent of its business, should also support earnings.
Wetherbee believes a $103 price target will be on the low side if the global economy improves faster than expected. FedEx closed Friday at $89.53 and has traded as high as $97.19 in the past 12 months.
FedEx operates a fleet of 663 aircraft at almost 400 airports worldwide.