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Nesbitt: FDX "Well-Positioned" Once Tariffs Pass, Expect Bumpy Road Until Then
Youtube· 2025-09-18 15:30
Core Viewpoint - FedEx is expected to report mediocre performance with earnings around $3.65, and the focus will be on consumer traffic and guidance for future performance [1][2][3]. Earnings Expectations - The earnings report is anticipated to show a mixed performance, as FedEx previously beat expectations but faced stock punishment due to lack of guidance for 2026 [3][4]. - Companies that provide clear guidance, especially regarding tariffs, have been rewarded, while those that are reluctant to give guidance have faced negative market reactions [4][5]. Operational Efficiency - FedEx is concluding its Drive program aimed at consolidating divisions and enhancing operational efficiencies, which may improve cost management [6]. - The company is also transitioning to a "Network 2.0" strategy to further enhance operational efficiency, although uncertainty around tariffs has impacted overall guidance [6][7]. Tariff Impact - The expiration of the de minimis exemption, which affects packages valued at $800 or less, could have significant implications for FedEx, although the immediate effects may not be visible in the current quarter [8][9]. Trading Strategies - Two trading strategies are being discussed: a bullish call diagonal and a bearish put calendar, both leveraging the dispersion in implied volatility levels [10][15]. - The bullish strategy involves buying a call option with a strike price of $227.12 and selling a higher strike call at $245, with a risk of approximately $740 [12][13]. - The bearish strategy involves buying a put option at $210 and selling the same put in a near-term option, with a risk of about $130 [16][17].