Zinger Key Points
- FedEx’s Q2 EPS from operations came in well below expectations, solely due to Express, one analyst says.
- The company’s earnings grew despite a decline in revenues, highlighting progress in cost saving, another analyst adds.
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FedEx Corp FDX shares tanked in early trading on Wednesday, after the company reported softer-than-expected earnings for its fiscal second quarter and reduced its full-year revenue guidance.
The results came amid an exciting earnings season. Here are four analysts' deep dive into the earnings release.
Goldman Sachs On FedEx
Analyst Jordan Alliger maintained a Buy rating and price target of $293.
FedEx reported its second-quarter earnings from operations at $3.99 per share, below expectations of $4.20 per share, Alliger said in a note.
The miss was solely due to Express, “which saw margin come in well below our 3.7% estimate at 1.7% — as inverse leverage around negative volume growth and mix-shift to lower yielding products more than offset any productivity gains attributable to the Drive program,” the analyst added.
BMO Capital Markets On FedEx
Analyst Fadi Chamoun reiterated a Market Perform rating and price target of $280.
The company’s quarterly results were “mixed,” Chamoun said in a note. “While overall EBIT increased by 17% y/y despite a 2.8% decline in revenues, which underscores progress on the cost savings programs,” he added.
The Express segment missed expectations “by a wide margin and deteriorated sequentially despite generally stable segment revenues,” the analyst further stated. Given the macro environment, the company’s progress on restructuring the air network is likely to be gradual, he added.
Check out other analyst stock ratings.
Oppenheimer On FedEx
Analyst Scott Schneeberger reaffirmed a Perform rating on the stock.
The Express segment’s revenue and adjusted operating income declined by 6% and 49% year-on-year, respectively, Schneeberger said. “The revenue decrease was driven by volume declines, lower fuel surcharges, reduced demand surcharges, and a mix shift toward lower yielding services,” he added.
The Ground/Freight segment’s revenue and adjusted operating profits grew 3% and 57% year-on-year, respectively, “primarily due to yield improvement, volume growth, and continued cost reductions,” the analyst further stated.
Stephens On FedEx
Analyst Jack Atkins maintained an Overweight rating on the stock.
“FDX lowered its FY24 consolidated revenue expectation (now looking for a low-single-digit % revenue decline y/y vs. flat y/ y revenue previously), but reiterated its adj. EPS outlook of $17.00- $18.50,” Atkins wrote in a note.
“While we are encouraged that FDX is able to maintain its EPS outlook despite lower-than-expected revenue, like the miss, this will come as a disappointment for investors who were largely expecting FDX to raise its guide,” he added.
FDX Price Action: Shares of FedEx had declined by 10.94% to $249.36 at the time of publication on Wednesday.
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