FedEx (FDX) gears to report for fiscal Q3 as vaccine shipments ramp up, and XPO Logistics (XPO) takes a key step toward spinning off its logistics business. XPO stock reversed lower after briefly breaking out while FedEx stock is working toward a buy point.
Transportation and logistics firm XPO announced a new company, GXO Logistics, Thursday that will house its logistics business after a planned spinoff of that business. It also revealed a confidential Form 10 filing tied to the spinoff, calling the move a significant milestone. The three letters GXO stand for “game-changing opportunities” for customers, it said.
GXO will become the second largest contract logistics provider in the world, the company said.
XPO Logistics disclosed the proposed spinoff last December to unlock value. It will focus on less-than-truckload freight transportation after the separation, which is set to complete in the second half of 2021.
Estimates: Wall Street expects FedEx earnings to soar 128% to $3.21 as revenue grows 14% to $19.97 billion. That would mark the third quarter of earnings acceleration, after a string of declines.
Results: Check back after the close.
FedEx Stock, XPO Stock
Shares of shipping giant FedEx closed down 0.9% to 263.51 in Thursday’s stock market trading. Its stock is forming a cup base with a 305.76 buy point after clearing the 50-day line, according to MarketSmith chart analysis. Archrival UPS edged down 0.3% after dipping below the 50-day line on Wednesday.
XPO stock fell 1.6% to 126.30 after rising intraday to 131.42, just topping a 128.67 buy point off a flat base or shallow cup base. FedEx stock and UPS have lagging RS lines, while XPO’s relative strength line is near the consolidation peak.
FedEx said March 1 it’s preparing for vaccine volumes to grow throughout the spring and summer, after the U.S. started distribution in December. It also began shipping the third approved vaccine, made by Johnson & Johnson (JNJ) and distributed by drug wholesaler McKesson (MCK).
“As manufacturers obtain approval to ship Covid-19 vaccines with greater temperature ranges and varying dosing allotments, we anticipate more of these packages moving to more places through our global network,” FedEx CEO Don Colleran said.
FedEx earnings have accelerated for two quarters, capped with a 92% gain in the second quarter. The pandemic lockdowns unleashed a flood of online shopping, which led to pricing gains across various segments for the shipping giant.
But margins for FedEx and UPS are under scrutiny as less-profitable residential volumes boom.
Last December, FedEx acquired e-commerce platform ShopRunner as Amazon.com (AMZN) grows its logistics and delivery business.
Amazon has become less of a customer and more of a rival to UPS and FedEx, which has reduced their relationship with the e-commerce giant.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
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