UPDATE 3-FedEx raises outlook, shares jump

* Sees 2011 EPS $4.60-$5.20 vs previous view $4.40-$5.00

* To reinstate 401(k) match effective Jan. 1

* FedEx shares up 5.7 pct, UPS shares up 1.8 pct
(Rewrites first paragraph, adds analyst quote, updates
shares)

By Helen Chernikoff

NEW YORK, July 26 (BestGrowthStock) – FedEx Corp (FDX.N: ) raised its
outlook on Monday on strong volume growth, giving a boost both
to its own shares and to the broader market as investors acted
on hopes that the economy is stronger than they had thought.

FedEx’s shares were up over 5 percent after the economic
bellwether said more packages are flowing through both its air
and ground networks, said BB&T Capital Markets analyst Kevin
Sterling.

“This is macro-related,” he said. “It’s a volume-driven
story.”

FedEx now expects fiscal 2011 earnings of $4.60 per share
to $5.20 per share, up from its previous forecast of $4.40 to
$5.00, the company said in a statement.

Analysts on average were expecting $4.98 per share,
according to Thomson Reuters I/B/E/S.

The company expects its premium “International Priority”
service to grow more than 20 percent in the first quarter, the
company said.

For the first quarter, ending on Aug. 31, FedEx raised its
earnings per share forecast to a range of $1.05 to $1.25, up
from a prior view of 85 cents to $1.05 and ahead of analysts’
estimates of $1.01.

Both FedEx and rival United Parcel Service Inc (UPS.N: ) are
poised to benefit from even a slow economic recovery because
during the downturn, they cut expenses and became more
efficient, said Sterling, who has a “buy” rating on FedEx and a
$100 price target. “They’re getting volume, which is growing
the top line, and they’ve got leverage on the bottom line.”

UPS shares also rose last week when the company raised its
outlook while reporting second-quarter earnings.

Memphis, Tennessee-based FedEx also said it would restore
its company match for 401(k) plans effective Jan. 1, another
sign of confidence, Sterling noted.

“We continue to like both FedEx and UPS as we see strong
leverage to volume growth amidst a more stable pricing
environment,” Deutsche Bank analyst Justin Yagerman wrote in a
note to clients. He has a “buy” on FedEx as well.

FedEx shares were up 5.7 percent at $83.46 in midday New
York Stock Exchange trading, while UPS gained 1.8 percent to
$64.82.

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(Reporting by Helen Chernikoff, editing by Gerald E. McCormick
and Lisa Von Ahn)

UPDATE 3-FedEx raises outlook, shares jump