FedEx Chairman Contradicts Fed Chief, Sparking Downgrade
NEW YORK (TheStreet) -- FedEx
The downgrade comes after FedEx reported strong fourth-quarter earnings on Wednesday but issued cautious guidance for 2014 that flies in the face of decidedly more upbeat remarks from Fed Chairman Ben Bernanke following the latest meeting of the Federal Open Market Committee.
While the FOMC said Wednesday it sees "downside risks to the economic outlook for the economy and the labor market as having diminished since the fall," the view from FedEx wasn't so upbeat. In announcing fourth-quarter earnings of $2.13 a share on sales of $11.4 billion, FedEx Chairman Fred Smith cited "tepid economic growth and customer preference for less costly international shipping services."
Morgan Stanley cut its price target to $105 from $112 on shares of the global shipping company. FedEx shares, which gained 1.07% to close at $100.54 Wednesday, were down by more than 2% in premarket trading Thursday.
While Morgan Stanley analyst William Greene acknowledged FedEx guidance may be too conservative, he doesn't believe it is likely to be raised until December, as "cost savings are likely to be back-half loaded."
-- Written by Dan Freed in New York.