Despite a stellar earnings report, FedEx stock is lower
A surge in e-commerce demand helped FedEx Corporation (NYSE:FDX) yesterday evening when the delivery company stepped up to the earnings plate, reporting fiscal second-quarter earnings and revenue that topped Wall Street's estimates. However, FedEx withheld its 2021 guidance, citing the tumultuous economic environment stemming from the pandemic. As a result, the stock is down 4.2%, last seen trading at $279.99.
The news led to at least four analysts chiming in. FedEx received no less than three price-target hikes, while two analysts lifted their estimates, the largest coming from Cowen and Company, which lifted its price target to $335 from $228. Meanwhile, J.P. Morgan Securities lowered its price target to $350 from $356. For perspective, heading into today 16 of the 22 analyst covering FDX sported a "buy" or better rating and the equity's consensus 12-month price target of $322.68 is a 16.2% premium to current levels.
Today, FedEx stock is pulling back even further from its Dec. 9 all-time high of $305.66. Today marks the first time the equity is trading back below the 30-day moving average since late November. Still, the security is testing support at the 60-day moving average, and has tacked on just over 83% in 2020.
As a result of today's action, option volume is surging across the board, with 77,000 calls and 56,000 puts having exchanged hands already -- seven times what's typically seen at this point. Most popular is the December 275 call, followed by the 270 put from the same series, with new positions being opened at the former.
The good news for options traders is that with earnings in the rearview, a volatility crush has made premium more affordable. FedEx stock's Schaeffer's Volatility Index (SVI) of 47% sits in the 19th percentile of its annual range. This means option traders are pricing in relatively low volatility expectations at the moment.