Implied volatility on FDX options is at historically low levels
Shares of shipping giant FedEx Corporation (NYSE:FDX) are lower this afternoon, last seen down 1.1% at $263.40. Daiwa Capital yesterday raised its price target on FDX to $275 from $240, helping the stock climb 2.1% to kick the week off near its July annual highs. Now up more than 84% over the last 12 months, a historic bull signal is flashing, suggesting the equity has room to run higher still.
Specifically, this recent peak peak came amid historically low implied volatility (IV), per Schaeffer's Quantitative Analyst Rocky White, a bullish combination in the past. White's data points to two other signals in the last five years when FedEx stock was trading within 2% of its 52-week high, while its Schaeffer's Volatility Index (SVI) was in the 20th percentile of its annual range or lower.
This is now the case with the equity's SVI of 22%, which is in the low 17th percentile of its annual range. One month after these signals, the shares were higher both times, averaging a 6.9% gain. From its current trading level, a similar move would put FDX at $281.57 -- levels not seen since August 2021.
Analysts are overwhelmingly bullish, but there's still room for some pessimism to unwind. While 14 in coverage recommend a "buy" or better rating, eight rate FedEx stock a tepid "hold."