In a note released Thursday morning, Citigroup analyst Christian Wetherbee added FedEx (NYSE: FDX) to the firm's 'Focus List'.
Wetherbee currently rates FedEx a Buy with a $170 price target.
"Ultimately, the confluence of robust volume growth driven by eCommerce penetration, another shortened peak season and UPS's internal focus on service improvements should put FedEx in a position to take market share," said Wetherbee.
Following last year's sub-optimal performance at UPS during the peak season, Wetherbee said FedEx is potentially in the position to be more disciplined/aggressive on package mix and possibly pricing on volumes. Moreover, he sees little risk of the company pushing volume away through these actions, due to UPS's internal focus.
According to Wetherbee's estimates, every one percent improvement in December to Domestic Express yield or Ground (ex. SmartPost) yield would result in a $0.035 per share benefit to FedEx's fiscal 2015 third quarter earnings.
Providing additional upside to estimates, Wetherbee believes that, following the completion of the company's current buyback plan, it is likely management will announce a $1-2 billion annual buyback.
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