Logistics major FedEx (NYSE:FDX) has reportedly not experienced any substantial impact on its air freight operations from the crisis in the Red Sea, according to Reuters.
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The series of attacks on maritime traffic from Yemen’s Houthis has resulted in the U.S. and UK dispatching ships to the region and undertaking countermeasures. A major chunk of global goods movement happens over oceans. Further, the Red Sea accounts for nearly 12% of this traffic.
Additionally, QatarEnergy, one of the largest names in the supply of LNG, has halted the movement of tankers via the Red Sea amid the crisis. The company plans to send shipments to Europe via the Cape of Good Hope if transit through the Red Sea is deemed unsafe. According to Reuters, this could increase voyage time by nearly 50%, translating into higher energy bills for Europe.
Is FedEx a Buy, Sell, or a Hold?
Meanwhile, FedEx shares have tanked by nearly 10% over the past month despite announcing an accelerated share repurchase program worth $1 billion in December. Following this decline, Stifel Nicolaus’ J. Bruce Chan has increased the price target for FedEx to $305 from $282 while maintaining a Buy rating. Overall, the Street has a Moderate Buy consensus rating on FedEx, and the average FDX price target of $301 implies a 21.1% potential upside in the stock.
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