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FedEx Corp. shares fell on Monday to their lowest level in three years, the package delivery giant having been affected by the fallout of the US-China trade war.
The late sell comes after a report over the weekend that China is conducting a regulatory investigation into FedEx, after diverting parcels sent by Huawei's Chinese network equipment giant to FedEx headquarters in Memphis. instead of being delivered to Huawei's offices in Asia.
FedEx said the packages had been accidentally diverted, suggesting they were not the result of US sanctions imposed on Huawei. Learn more about the Trump administration's decision to ban business relations with Huawei.
The stock
FDX, -1.26%
fell by 1.3% in afternoon trading, putting it on the verge of closing to the lows since July 6, 2016. The sale comes after a series of four-week losses during which the stock price fell from 18% until Friday. In comparison, the rival actions of United Parcel Service Inc.
UPS + 1.30%
fell 12.9% in the four weeks to Friday, the Dow Jones Transportation Average
DJT, + 0.22%
paid 11.1% and the S & P 500 index
SPX, -0.28%
lost 6.6%.
UBS analyst Thomas Wadewitz then reduced his equity price target to $ 136, the lowest of 27 analysts polled by FactSet. Wadewitz reiterated the sales note he had on FedEx since April 26, when he became the only analyst covering FedEx to be bearish.
The price target is now lower by about 10.7% at current levels.
"Although it is difficult to anticipate the results [of China’s investigation], we think it's reasonable to anticipate the pressure on [FedEx’s] business with some of its outbound customers in China, which adds to the current context of low international air cargo activity, "wrote Wadewitz in a note addressed to customers.
Wadewitz believes that China 's business turnover accounts for about $ 4.5 billion, accounting for 6% of the total business turnover.
He reduced his estimate of earnings per share in the fiscal year 2020 from 15.45 USD to 15.00 USD and his estimate in fiscal year 2021 from 15.50 USD to 15.25 USD. In comparison, FactSet's EPS consensus is US $ 16.66 for fiscal year 2020 and US $ 18.41 for 2021.
FactSet estimates an average of 27 analysts surveyed, which equates to the purchase, and its average price target is $ 207.29, or 36.1% above current levels.
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