FedEx Posts Downbeat Q1 Earnings, Cuts Guidance: Why Analysts See More Downside Ahead

Here are some key analyst takeaways.

• BMO Capital Markets analyst Fadi Chamoun reiterated a Market Perform rating, while reducing the price target from $325 to $300.
• Stifel analyst Bruce Chan maintained a Buy rating, while cutting the price target from $327 to $321.
• Goldman Sachs analyst Jordan Alliger reaffirmed a Buy rating, while reducing the price target from $332 to $328.
• Stephens analyst Daniel Imbro maintained an Overweight rating and price target of $350.

Check out other analyst stock ratings.

BMO Capital Markets: FedEx reported its adjusted EBIT and earnings at $1,208 million and $3.60 per share, below consensus of $1,611 million and $4.75 per share, respectively, Chamoun said in a note. Softer demand and a "mix shift towards lower-yielding products” impacted the company's results.

"FDX sees revenue growth at the low end of the previous guidance range driving F2025 outlook lower," the analyst wrote. DRIVE remains on track to deliver $2.2 billion in structural cost savings in fiscal 2025. Analysts say that “the risk to revenue assumptions remains to the downside.”

Stifel: FedEx posted disappointing results for the fiscal first quarter, with adjusted earnings almost 25% below consensus. A mix shift towards higher volumes of less profitable freight impacted the results, Chan added.

"DRIVE program cost savings helped offset some of the elevated expenses this quarter, but we believe the savings were not as material as expected, largely due to timing," the analyst wrote. "Management expects cost savings to ramp sequentially and revenue management initiatives to address yield pressure over the course of the year, but we think the shortfall this quarter makes it tougher to achieve an already downwardly-revised annual earnings guidance midpoint," he further stated.

Goldman Sachs: FedEx's results showed that the "freight recession continues especially in B2B and manufacturing,” Alliger said. Results from Ground Commercial, Domestic Priority and International Priority came in weaker than expected, he added.

Management lowered their adjusted earnings guidance for fiscal 2025 to $20-$21 per share, from their previous forecast of $20-$22 per share, with a downward revision of the revenue growth guidance to low-single-digits, from low-single-digits to mid-single-digits, the analyst stated. “Ongoing volume related mix pressures, and the impact on the margins," could impact the company's performance for the rest of the year.

Stephens: "The miss vs. our model was largely driven by softer FEC margin (and lighter revenue) along with weaker results in FDX Freight, partially offset by lower interest and other expenses," Imbro wrote in a note. Management lowered their full-year revenue growth guidance as "a weaker macro is partially offset by pricing actions," he added.

The guidance now implies an "even heavier" weighting in the back half of the year, the analyst stated. "Permanent DRIVE savings of $2.2 billion were reiterated, along with ~$5.2 billion in CapEx," he further stated.

FDX Price Action: Shares of FedEx had declined by over 15.5% to $253.76 at the time of publication on Friday.

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