FedEx Braces For Q2 Earnings: 'One Of The Most Consequential Quarters In Years,' Analyst Says

FedEx Corp. FDX is set to report its fiscal second-quarter results on Thursday after the closing bell and analysts are expecting a decline in earnings. 

What To Know: FedEx reported disappointing first-quarter results in September with adjusted earnings nearly 25% below consensus estimates. The company cited a mix-shift that trended toward higher volumes of less profitable freight and weakness in its industrial and manufacturing customers. 

"The soft industrial economy is clearly weighing on the [business-to-business] volumes. And it was definitely much weaker than we expected," FedEx CEO Raj Subramaniam said on the company's most recent earnings call. 

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FedEx is often seen as a bellwether for the economy because shipping volumes correlate with both industrial and consumer demand. 

Investors will be looking at the performance of FedEx’s Express unit which could be affected by demand-induced volume weakness and listening for more information on the potential spinoff of its Freight business. 

Investors will be looking for updates on FedEx’s DRIVE cost-cutting program, which aims to achieve $4 billion in savings by fiscal 2025. 

What Else: President-elect Donald Trump suggested the possibility of privatizing the U.S. Postal Service, which could benefit FedEx and other private parcel carriers like United Parcel Service, Inc. UPS. 

"There is talk about the Postal Service being taken private, you do know that — not the worst idea I've ever heard," Trump told reporters at Mar-a-Lago on Monday. "It's a lot different today between Amazon and UPS and FedEx, and all the things you didn't have."

Expert Ideas: Last week, Bernstein analyst David Vernon downgraded FedEx from Outperform to Market Perform and lowered the price target from $337 to $316 ahead of its second-quarter report. 

Citi analysts wrote Friday that the coming earnings report “could be one of the most consequential quarters in years” for FedEx, per Investopedia. 

FedEx will report its second-quarter financial results after Thursday's closing bell and will host a conference call to discuss the results at 5:30 p.m. ET the same day. According to estimates from Benzinga Pro, analysts expect the company to report earnings of $3.91 per share on quarterly revenue of $22.12 billion. 

FDX Price Action: According to Benzinga Pro, FedEx shares ended Wednesday's session down 1.54% at $273.16. 

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