Equity markets remain in an upward trend as investors approach the halfway point for 2013. Discussions remain centered on the NSA surveillance, with public companies such as Apple Inc. (NASDAQ:AAPL), Facebook Inc (NASDAQ:FB), and Facebook Inc (NASDAQ:FB) revealing the number of requests received from local, state, and federal agencies.
The Federal Reserve is also hosting a two-day policy meeting on Tuesday, June 18 and Wednesday, June 19. Investors are focused on the sustainability of the Fed’s quantitative easing programs and when the central bank may decide to raise interest rates from near-zero levels, a position the bank has held since December 2008.
Historically, the stock market has benefitted in times of normalized interest rates. Bulls believe the economy can expand on its own and asset prices can recover based on improving data. Bears stand in contrast, citing the weakest economic recovery since World War II and large fiscal deficits.
I remain focused on identifying company-specific stories that are likely to impact your portfolio. Here are three companies I’m watching this week, as well as recent events that may affect the upcoming reports:
Wednesday, June 19 before market open; EPS $1.96 / Revenue $11.44B
In April, FedEx Corporation (NYSE:FDX) announced it won the full contract from the U.S. Postal Service for transportation of Express Mail and Priority Mail between airports for the next 7 years. While FedEx has maintained a long relationship with USPS, news of a 100% award came as a surprise to the market.
Analysts had expected the Postal Service to split the contract more evenly between FedEx and larger rival United Parcel Service, Inc. (NYSE:UPS). The business is estimated to be worth $10.5 billion and helps FedEx Corporation (NYSE:FDX) maintain package volume.
Ahead of Wednesday’s earnings release, numerous Wall Street firms have stated FedEx’s 2014 guidance remains too high. New York-based Citigroup lowered its full year estimates for 2014 to $7.10 from a previous $7.50. Other firms believe that FedEx could lower guidance to between $6.75 – $7.00.
The average estimate for 2014 currently stands at $7.36, indicating there’s further room for downward revision. FedEx Corporation (NYSE:FDX) is focused on restructuring its Express unit by reducing costs as a result of lackluster demand, particularly from international customers.
Long-term investors may find an attractive entry point in FedEx Corporation (NYSE:FDX) if management provides an “expectations reset” on Wednesday’s conference call. I expect to see a temporary sell-off following the report.