Fedex Hits 20-Month High After Surcharge News

Fedex Corp. (FDX) has booked substantial upside since March, ending a multiyear downtrend that accelerated after Amazon.Com Inc. (AMZN) revealed it would bring deliveries in-house through a new shipping division. The stock posted an 8-year low and turned higher into April when AMZN reversed gears, returning a fair share of packages to third party carriers so it could concentrate on surging demand, in reaction to the COVID-19 pandemic.

Fedex Adds Fourth Quarter Surcharges

The shipping giant is still trading nearly 70 points below January 2018’s all-time high at 275, despite the 117-point advance into August, telling market watchers it will take months before the former market leader can post a new high. It took a big step in that direction on Tuesday morning, instituting seasonal peak surcharges and fees that will add substantially to revenue between October and mid-January.

A company statement justified the surcharges, noting “FedEx continues to keep commerce moving and delivering critical shipments to homes during the COVID-19 pandemic. As the impact of the virus continues to generate a surge in residential deliveries, we are entering this holiday peak season with extremely high demand for capacity and are experiencing increased operating costs across our network. We anticipate residential volume to continue to surge into the New Year.”

Wall Street And Technical Outlook

Wall Street consensus has improved in recent months, with a ‘Moderate Buy’ rating based upon 14 ‘Buy’ and 8 ‘Hold’ recommendations. No analysts are telling shareholders to close positions and move to the sidelines at this time.  Price targets currently range from a low of $100 to a street-high $235 while the stock opened Tuesday’s session just $19 below the high target. It will be tough for Fedex to add to gains with this placement, but this morning’s news could generate higher targets.

Fedex lifted above the 200-day moving average for the first time since October 2018 in June, signaling a new uptrend. The 5-month uptick has now reached strong resistance just above 200, predicting that price action will roll into a sideways pattern or pullback that shakes out weak hands. A decline into the moving average, currently in the 150s, could offer a low risk entry in this scenario, underpinned by accumulation readings that have now hit new highs.