Will Its Recent Cyberattack Torpedo FedEx Q1 Results?

FedEx Corporation (NYSE: FDX) was a victim of a cyberattack in late June, something investors should keep in mind heading into the company's fiscal first-quarter earnings report on Sept. 19, analysts at Baird Equity Research commented. The firm's Benjamin J. Hartford maintains an Outperform rating on FedEx's stock with a price target boosted from $230 to $235.

FedEx's TNT unit was the victim of a cyberattack and while it is difficult to quantify the impact, it will likely be the "dominant focus" of the earnings report, Hartford argued in a research report. But investors shouldn't be surprised if the total impact to FedEx from the cyberattack is in the range of $400 million to $600 million which is twice the impact of what Maersk suffered in the same cyberattack.

As such, FedEx is expected to "modestly" increase its fiscal 2018 capex budget to address internal controls and secure affected operating systems, the analyst continued. Nevertheless, the increase won't be considered to be materially higher but at the very least large enough to "weigh on investor sentiment near term."

But on the other hand, FedEx's long-term earnings per share outlook will likely be unaffected. Despite the cyberattack, the company did reaffirm its fiscal 2020 EBIT improvement target, which supports the path toward an EPS of $17.50-plus at that time.

Bottom line, investors should consider any pullback in FedEx's stock toward the low-$200 level as a buying opportunity given there is no change to the company's longer-term outlook.

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