FedEx has 'lucrative backdoor' to bigger role in e-commerce, says Citi
Reuters
Published May 09, 2022 11:31AM ET
(Reuters) - FedEx Corp (NYSE:FDX) can boost its profit by $1 billion annually if the delivery giant leverages its ShopRunner buyout and its partnership with Microsoft to deepen its e-commerce presence and cater directly to customers, Citigroup (NYSE:C) analysts said on Monday.
The brokerage's report, which also said the company could nearly double its share price in four years from current levels, comes as FedEx struggles with slowing growth after a pandemic-fueled surge in online shipments.
"FedEx could become ecommerce's universal shopping cart by augmenting ShopRunner's hundreds of merchant partners to thousands, and building a base of millions of subscribers that would get free expedited shipping," Citigroup analyst Christian Wetherbee said on Monday.
Memphis, Tennessee-based FedEx acquired e-commerce platform ShopRunner in 2020, while entering into a partnership with Microsoft Corp (NASDAQ:MSFT) earlier this year.
"By leveraging ShopRunner assets through incremental technology investments with its partner Microsoft, we think FedEx can make itself a bigger part of the checkout process, increasing its role in the ecommerce sales experience," the analyst said.
Wetherbee said currently consumers have little or no choice over which company delivers the products they have bought online.
In March, FedEx posted lower-than-expected quarterly earnings, hit by ongoing labor woes and the Omicron outbreak, and said second-half ground margins would miss internal targets.
FedEx's shares were flat at about $208 in early trade on Monday. They have lost nearly 20% of their value this year, through Friday's close.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.