After nearly one year of maintaining positive rating for the FedEx (NYSE: FDX) shares, Susquehanna has downgraded the shares to neutral. The last rating was done during March 2017. The macroeconomic conditions weren’t as bad compared to these days for FedEx. The research firm has cited three reasons for the recent downgrade. Below are our interpretations of the cited reasons.
- The first reason is the lack of visibility on the value addition resulting from the TNT integration. (Susquehanna has raised concerns on the decreasing European market share.)
- The second reason is the unfavorable macroeconomic condition. Most probably, trade war should have been one of the factors considered by Susquehanna.
- The third reason is related to an increase in capital expenditures, especially after the bonus depreciation by the US as a part of Govt tax reforms. The move by the US has encouraged companies like FedEx to invest in assets that will add value in the long term. However, the shares may not benefit in the near term.