FedEx (FDX) stock is spiraling Friday after the logistics giant missed top- and bottom-line expectations for its fiscal first quarter and revised its full-year outlook.
In the quarter ended August 31, FedEx's revenue decreased 0.5% year-over-year to $21.6 billion and its earnings per share (EPS) plunged 20.9% from the year-ago period to $3.60.
In a statement, FedEx CEO Raj Subramaniam called the quarter "challenging." However, he added that the company remained "focused on transforming our network, improving our efficiency, lowering our cost-to-serve, and enhancing our ability to adapt with speed to evolving market dynamics."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Subramaniam says he is "confident in the value-creation opportunities ahead as we focus on reducing our structural cost, growing revenue profitably, and leveraging the insights from our vast collection of data as we continue to build the world's most flexible, efficient, and intelligent network."
FedEx's results fell short of analysts' expectations. Wall Street was anticipating revenue of $21.9 billion and earnings of $4.76 per share, according to CNBC.
As a result of this disappointing start to the year, FedEx revised its full-year outlook. The company now anticipates low single-digit revenue growth and earnings per share in the range of $20 to $21. It had previously forecasted low to mid-single-digit revenue growth and EPS in the range of $20 to $22.
"Our revised outlook reflects our continued confidence in the execution of our DRIVE [cost-cutting] initiatives and the effects of our recent pricing actions, which we expect to help offset weaker-than-expected demand trends," said FedEx Chief Financial Officer John Dietrich in a statement.
Is FedEx stock a buy, sell or hold?
It's been a volatile year for FedEx on the price charts and Friday's decline nearly erases the industrial stock's year-to-date gain. Still, Wall Street has remained bullish toward FDX.
According to S&P Global Market Intelligence, the average analyst target price for FDX stock is $310.77, representing implied upside of more than 20% to current levels. Additionally, the consensus recommendation is Buy. However, analysts are downwardly revise their price targets and ratings and may cut their ratings following the disappointing quarter.
Financial services firm Stifel is one of those that lowered its price rating on FedEx after earnings, to $321 from $327, while maintaining its Buy rating on the large-cap stock.
"Secular macroeconomic tailwinds are waning for FedEx, or are at least on pause for now, especially as trends like e-commerce penetration of total retail reset lower vs where they were at the height of the pandemic," says Stifel analyst Bruce Chan. "We believe there is still long-term opportunity for FedEx once secular trends resume their glide path post-COVID, and in a more mature and more disciplined global oligopoly, FedEx should be well-positioned to benefit."
Related Content
-
Did Florida’s Chance at $1,000 in Property Tax Rebates Vanish?State Taxes The Florida Legislature bypassed Gov. Ron DeSantis’ wish to cut property taxes and instead voted to lower the state’s sales tax.
-
Wall Street Is Worried About Apple Stock. Should You Be Too?Analysts expect Trump's sweeping tariffs to have an outsized impact on Apple stock. How concerned should investors be?
-
Wall Street Is Worried About Apple Stock. Should You Be Too?Analysts expect Trump's sweeping tariffs to have an outsized impact on Apple stock. How concerned should investors be?
-
The Stock Market Is Selling Off. Here's What Investors Should DoInvestors are fleeing the equities market en masse in response to the Trump administration's "jaw-dropping" tariffs. But the experts say don't panic.
-
How Building Liquidity Into Your Retirement Plan Can Pay OffTo succeed in investing for retirement, you need time and discipline — liquidity can give you both.
-
Striking Oil in Opportunity Zones: Now Might Be the Best Time to InvestYou could unlock hidden wealth in QOZs with strategic oil and gas investments, potentially combining tax advantages with long-term growth in an essential industry.
-
Stock Market Today: It's the Old Up-Down Again on Liberation DayMarkets look forward to what comes with the reordering of 80-year-old global trade relationships.
-
Can a New Manager Cure Vanguard Health Care Fund?Vanguard Health Care Fund has assets of $40.5 billion but has been ailing in recent years. With a new manager in charge, what's the prognosis?
-
What You Don't Know About Annuities Can Hurt YouLack of awareness leads many to overlook these potent financial tools, and with the possibility of running out of money in retirement, that could really hurt.
-
Three Keys to Logical Investing When Markets Are VolatileFocusing on these market fundamentals can help investors stay grounded rather than being swayed by emotion or market hysteria.
