Yesterday, the once sky-high shares of FedEx Corporation FDX plunged by 3.32% to $280.13 per share, from $289.74 just days before. The descent was catalyzed by the somber news of USPS opting not to renew their longstanding air-cargo bond with FedEx. The looming expiration date for this partnership is set for Sep 29, 2024.
The fiscal report of the third quarter of 2024, released last month, alluded to ongoing dialogues between FedEx and USPS. These talks were aimed at forging a fresh, multi-year contract to maintain FDX’s status as the go-to air-cargo provider for USPS. Yet, the recent turn of events appears to signify a deadlock in negotiations, signaling the end of a more than two-decade alliance between FDX and USPS.
This shift in winds understandably jolted FDX investors, causing ripples in the stock price. Despite this setback, FedEx has vowed to uphold its commitment to deliver exceptional air transport services to USPS until the contractual ties sever next autumn.
UPS Takes the Lead
Stepping into FedEx’s shoes, United Parcel Service UPS, has emerged as the new chief air-cargo provider for USPS. This freshly minted agreement, boasting a minimum term of five-and-a-half years, is scheduled to kick off on Sep 30, 2024. The finer financial nuances of the UPS-USPS deal, however, remain shrouded in secrecy.
Expressing her elation at this pivotal juncture, Carol Tome, the CEO of UPS, articulated the synergy between the two entities as they embark on this innovative venture. Tome hailed the deal as advantageous and hailed its potential to enhance the logistics landscape, providing a unique, efficient, and reliable integrated network.
The finalization of this partnership aligns with USPS’ strategic vision of streamlining and optimizing national and local transportation networks. USPS’s overarching objective is a $3 billion reduction in the transportation expenditure over the next two years, following an already attained $1 billion cut in air-freight expenses.
Zacks Rank Update
Presently, both FDX and UPS are sporting a Zacks Rank #3 (Hold).
Investors inclined towards the broader arena of the Transportation sector might find interest in SkyWest SKYW, donning a Zacks Rank #1 (Strong Buy). This company has caught the eye with its commendable fleet modernization endeavors and has benefited from a robust air-travel demand. Notably, SKYW’s 2024 earnings have seen a noteworthy 26.3% surge in the past 60 days, and its stock value has catapulted by an impressive 213% in the last year.
Additionally, SKYW anticipates an earnings growth rate exceeding 100% for 2024. It has a track record of surpassing market expectations with an average trailing four-quarter earnings surprise of 128.02%.
Zacks Names “Single Best Pick to Double”
Amidst the vast sea of stocks, five Zacks experts have singled out their top contenders they predict could skyrocket by over 100% in the months ahead. Among these, Director of Research Sheraz Mian handpicked a lesser-known chemical entity that has witnessed a 65% surge in the past year and still presents an enticingly low valuation. With surging 2022 earnings estimates and a share repurchase program worth $1.5 billion, the stock beckons retail investors to hop aboard
This prodigious entity has the potential to outshine recent Zacks’ Stocks Set to Double like Boston Beer Company shooting up +143.0% in slightly over 9 months and NVIDIA soaring +175.9% within a year.
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The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
