FedEx Stock Hit With Bear Note Before Earnings

The firm will report its fiscal first-quarter earnings after the close tomorrow

Digital Content Manager
Sep 16, 2019 at 3:01 PM
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The shares of FedEx Corporation (NYSE:FDX) are lower today, after J.P. Morgan Securities cut its December 2020 price target by $4 to $168. This comes just one day before the shipping giant's fiscal first-quarter earnings report, slated for release after the close tomorrow, Sept. 17, and has the stock down 0.5% to trade at $173.19.

Historically speaking, FDX has tended to underperform the day after earnings. In fact, just three of its last eight next-day moves were positive. Plus, the security suffered a massive post-earnings plummet of 12.2% after FedEx's December report. This time around, the options market is pricing in a swing of 8%, much bigger than the 4.1% post-earnings move FDX has averaged over the past two years. 

Another post-earnings swing south could draw more bear noes. Nine analysts currently call the stock a "buy" or better, while seven say it's a "hold" or worse. Meanwhile, the 12-month consensus price target of $187.19 is a roughly 8% premium to current levels. 

Elsewhere on the sentiment front, short-term options players are more put-skewed than usual. The equity's Schaeffer's put/call open interest ratio (SOIR) of 1.39 is in the 97th percentile of its annual range. The October 85 put is home to peak open interest on FDX, and data from the major options exchanges confirms sell-to-open activity at this deep out-of-the-money strike. By selling the puts, speculators may be setting a short-term floor -- or looking to profit on a post-earnings volatility crush.

Taking a look at the charts, FDX was recently able to rally off its late-August three-year low of $147.95. The shares are running out of steam in the $175 region, though, which has served as a ceiling since mid-May.

FDX Sept 16

 

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