Presenting packages by rocket and developments in blockchain technology may be the future of shipping, but the current bullish case for FedEx looks at a different industry transformation: e-commerce.
“A generational make it to ecommerce shipments, solid global trade prospects, management’s incremental heart on improving returns and a cheap valuation make FedEx shares a compelling moment,” Barclays transportation analyst Brandon Oglenski wrote in a note Thursday.
FedEx is no “unicorn array,” Oglenski said, but it is the firm’s top pick when “left choosing between inconsequential than ideal outcomes” among transportation companies. Barclays undergoes FedEx stock gaining 20 percent from Wednesday’s culmination at $225.93.
“A solid backdrop for global transportation demand and greater focus on rightly pricing the robust but less efficient ecommerce growth should cure assuage many market fears, leaving plenty of upside concealed in FedEx,” Oglenski wrote.
Despite multiple references to e-commerce, one repute was absent throughout Oglenski’s note: Amazon.com. Shares of both FedEx and In harmony Parcel Service dipped in October when reports surfaced that Amazon is demanding a new delivery program called “Seller Flex,” in which the company devise pick up packages from third parties selling on its platform and hand out the products to consumers.
Amazon said in a statement that it plans to persist in using its current delivery partners. Morningstar equity analyst Keith Schoonmaker told CNBC that align equalize if Amazon gets into delivering packages itself, it won’t hurt logistics parties as much as investors first thought.
Oglenski also sees FedEx intimate another important gap on UPS in how much it earns per package.
FedEx had been selecting progress until June, when subsidiary TNT Express suffered a cyberattack disturbing operations and communications. Barclays said it expects FedEx to reverse the latest decline caused by that attack to make up lost ground on UPS.