Delivering packages by rocket as well as developments in blockchain technology may be the future of shipping, although the latest bullish case for FedEx looks at a different industry transformation: e-commerce.
“A generational shift to ecommerce shipments, solid global trade prospects, management’s incremental focus on improving returns as well as a cheap valuation make FedEx shares a compelling opportunity,” Barclays transportation analyst Brandon Oglenski wrote in a note Thursday.
FedEx is actually no “unicorn stock,” Oglenski said, although the idea is actually the firm’s top pick when “left choosing between less than ideal outcomes” among transportation companies. Barclays sees FedEx stock gaining 20 percent by Wednesday’s close at $225.93.
“A solid backdrop for global transportation demand as well as greater focus on properly pricing the robust although less efficient ecommerce growth should help assuage many market fears, leaving plenty of upside potential in FedEx,” Oglenski wrote.
Despite multiple references to e-commerce, one name was absent throughout Oglenski’s note: Amazon.com. Shares of both FedEx as well as United Parcel Service dipped in October when reports surfaced of which Amazon is actually trying a brand-new delivery program called “Seller Flex,” in which the company will pick up packages by third parties selling on its platform as well as deliver the products to consumers.
Amazon said in a statement of which the idea plans to continue using its current delivery partners. Morningstar equity analyst Keith Schoonmaker told CNBC of which even if Amazon gets into delivering packages itself, the idea won’t hurt logistics companies as much as investors first thought.
Oglenski also sees FedEx closing another important gap on UPS in how much the idea earns per package.
FedEx had been generating progress until June, when subsidiary TNT Express suffered a cyberattack disrupting operations as well as communications. Barclays said the idea expects FedEx to reverse the recent decline caused by of which attack to make up lost ground on UPS.