Industrials

FedEx’s (FDX) mixed guidance trends signal a “lack of earnings visibility” while its fiscal Q3 commentary points to a “challenging” Q4, Morgan Stanley said in a Wednesday note. The company reported fiscal Q2 non-GAAP diluted earnings Tuesday of $3.99 per share, up from $3.18 a year earlier, while revenue declined to $22.2 billion from $22.8 billion. For the full fiscal year, FedEx expects revenue to decline by a low-single-digit percentage, compared with its prior forecast of flat revenue growth. Morgan Stanley said fiscal Q2 earnings missed Street estimates, as expected, and that the quarter’s results demonstrate the challenge that the revenue versus cost dynamic presents. The investment firm said pressures on the company’s revenue outweigh the gains from its DRIVE cost-cutting program. “We believe FDX is an idiosyncratic revenue story rather than an idiosyncratic cost story like the market believes,” said Morgan Stanley. According to the firm, savings from the

FedEx’s (FDX) express business is expected to see continued headwinds in the second half of fiscal 2024, though freight and ground should support the company’s earnings, UBS Securities said Wednesday. Late Tuesday, the parcel delivery giant projected a drop in full-year sales after its fiscal second-quarter results missed Wall Street estimates amid demand headwinds. The express segment’s operating income fell due to lower revenue, which was driven by volume declines, lower fuel surcharges and reduced demand surcharges, according to the company. UBS said the revenue and margin performance of the express segment was worse than the firm’s expectations. The brokerage lowered its full-year per-share earnings estimate for FedEx to $17.60 from $18.50 amid “weaker” express margin performance, analysts Thomas Wadewitz, Michael DiMattia and Michael Triano said in a note. FedEx shares were down nearly 11% in Wednesday late-afternoon trade. The demand backdrop continues to be “difficult,” Chief Executive Raj Subramaniam

CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows: Our 12-month target price of $263, cut by $6, reflects a 12x multiple of our revised FY 25 (May) EPS estimate, about in line with FDX’s historical forward average. We cut our FY 24 (May) EPS estimate by $0.69 to $17.69 and FY 25’s by $0.50 to $21.92. FQ2 operating EPS of $3.99 vs. $3.18, missed the consensus view by $0.21. Volumes were light, a continuation of demand headwinds seen in FQ1, but worse than FDX had expected. Updated FDX guidance for FY 24 indicates a revenue outlook that is slightly worse than before. Notably, FDX sees revenues down low-single digits in FY 24 rather than flat, and may reflect some higher competitive pressure from the U.S. Postal Service, as it shifts toward ground shipments rather than

The following is a summary of the FedEx Corporation (FDX) Q2 2024 Earnings Call Transcript: Financial Performance: FedEx’s Q2 revenue saw a 3% increase at FedEx Ground, but suffered a decline of 4% at FedEx Freight and 6% at FedEx Express due to lower shipments and contraction in the market. Despite reductions in revenue, FedEx saw operating margin growth, reporting a 57% rise in adjusted operating income for the Ground Segment, a 11% rise for the Freight segment, but a significant 49% decline for Express. Despite expected declines in revenue, FedEx maintains its adjusted EPS outlook within $17 to $18.50. FedEx ended the quarter with a solid liquidity position of $6.7 billion and has completed another $500 million share repurchase transaction. Capital investments for the quarter were $1.3 billion, leading to a year-to-date CapEx of $2.6 billion. Business Progress: FedEx managed to grow its parcel volume in the US, Europe,

FedEx (NYSE:FDX) stock Analyst Ratings Date Upside/Downside Analyst Firm Price Target Change Rating Change Previous / Current Rating 12/20/2023 21.27% JP Morgan $322 → $305 Maintains Neutral 10/02/2023 25.25% Susquehanna $225 → $315 Upgrades Neutral → Positive 09/29/2023 31.21% HSBC → $330 Initiates Coverage On → Buy 09/22/2023 9.34% Loop Capital $255 → $275 Maintains Hold 09/22/2023 17.3% Deutsche Bank $255 → $295 Maintains Buy 09/22/2023 15.31% BMO Capital $280 → $290 Maintains Market Perform 09/21/2023 31.21% B of A Securities $309 → $330 Maintains Buy 09/21/2023 28.43% UBS $312 → $323 Maintains Buy 09/21/2023 5.37% Jefferies $245 → $265 Maintains Hold 09/21/2023 15.31% Stephens & Co. → $290 Reiterates Overweight → Overweight 09/21/2023 15.71% Evercore ISI Group $276 → $291 Maintains Outperform 09/21/2023 -18.49% Morgan Stanley $200 → $205 Maintains Equal-Weight 09/21/2023 11.33% Wells Fargo $270 → $280 Maintains Equal-Weight 09/21/2023 10.93% Raymond James $270 → $279 Maintains Outperform

JPMorgan analyst Brian Ossenbeck maintains FedEx (NYSE:FDX) with a Neutral and lowers the price target from $322 to $305.

FedEx’s outlook is likely better than the dour results from the shipping giant’s Express unit would suggest, Citi analysts say in a research note. “We think it is likely as simple as cyclical trough margins persisting as volume hits cycle lows,” they say. “When the cycle turns (which may be happening now), we think leverage will return.” They add that management’s inability to bolster margins in the segment likely hurts credibility. “We were disappointed in how much management sounded like the ‘old’ FedEx,” they say. FedEx CEO Raj Subramaniam took over last year, succeeding founder and longtime CEO Fred Smith.

FedEx’s F2Q bottom-line miss was primarily driven by the impact of severe macro headwinds in its Express unit’s volumes and the inability to move the cost needle as quickly in that segment, say analysts at Evercore ISI in a research note. They say that weak Express margins aren’t indicative of hiccups in FedEx’s cost-saving initiatives, which showed up more clearly in the Ground and Freight segments. The delivery giant did cut its revenue guidance for the second time this year, but its EPS guide remained intact, proving the initial successes of its cost initiatives, say the analysts.