FedEx Upgraded On Improved Profit Outlook, Favorable Risk-versus-reward

FedEx Corp. was upgraded on Tuesday to buy from hold at Stifel Nicolaus, which cited expectations of improved profitability and a favorable risk-versus-reward scenario. Analyst David Ross said the package delivery service's internal initiatives, such as the acquisition of TNT Express, should help deliver "significant earnings growth" in the face of slow global economic growth. Ross said he believes the margin outlook for FedEx's Express business is positive, and profitability at its ground and freight businesses should improve following a disappointing fiscal first quarter. Ross sees upside potential for the stock to $200, and downside risk to $120, which represents a reward-versus-risk profile of 33% to 20%. FedEx's stock gained 0.7% in premarket trade. It has fallen 14% year to date through Monday, while the S&P 500 has slipped 3.5%.