Core Viewpoint - United Parcel Service Inc. (UPS) and FedEx Corp. are facing challenges due to the end of U.S. de minimis exemptions, which is tightening trade flows, threatening parcel volumes, and increasing costs as the peak shipping season approaches [1] Company Summaries UPS - Bank of America Securities downgraded UPS to Underperform from Neutral, citing a soft peak backdrop for 2025 and reducing earnings estimates and price forecasts [2] - The price forecast for UPS was lowered to $83 from $91, with revised earnings estimates of $1.30 for Q3 2025, $6.50 for fiscal 2025, and $6.70 for fiscal 2026, reflecting reductions of 6%, 3%, and 4% respectively [3] - UPS has struggled to offset volume losses, particularly as it reduces Amazon-related shipments, which account for approximately 11% of revenue [4] - U.S.-China parcel flows, a significant revenue source for UPS, fell nearly 35% year over year in May and June due to the loss of de minimis access [4] - Since the start of 2025, EPS estimates for UPS have decreased by 26% to 33% [7] FedEx - FedEx was downgraded to Neutral from Buy, with a dimming outlook despite ongoing cost-cutting measures and plans to spin off its Freight division [2] - The price forecast for FedEx was reduced to $240 from $245, with earnings estimates lowered by 7% for Q1 fiscal 2026, 6% for fiscal 2026, and 7% for fiscal 2027, now at $3.56, $17.75, and $20.45 respectively [5] - The margin expectation for FedEx's Express unit was lowered to 6.9% from 7.3%, with inflationary pressures and weakening trade flows cited as key performance drags [6] - Since the start of 2025, EPS estimates for FedEx have fallen by 23% to 24% [7] Industry Overview - The broader sector outlook is deteriorating due to the lapse of the de minimis exemption, which previously allowed many small parcels, particularly from China, to bypass duties [7] - Both UPS and FedEx derive over 15% of their revenue from international express shipments, making the policy shift a significant concern in an already soft macro environment [7]

Core Viewpoint - Bank of America analysts have downgraded shares of FedEx and UPS, reflecting increased caution regarding the performance of these U.S. shipping giants amid rising pressures on volume and costs [1][3]. Group 1: Rating Changes - FedEx's rating was downgraded from "buy" to "neutral," with a price target reduced by $5 to $240, which is below the average target of over $269 [2]. - UPS's rating was changed from "neutral" to "underperform," with a target set at $83, the lowest tracked by Visible Alpha and significantly below the mean of approximately $107 [2]. Group 2: Market Context - Both FedEx and UPS stocks have been underperforming this year, contrasting with the S&P 500's rise, indicating broader market challenges for these companies [3]. - The downgrade comes in light of increased pressure on volume and costs, exacerbated by the Trump administration's decision to close a tariff exemption for certain low-value items, impacting some companies negatively [3]. Group 3: Recent Performance - UPS reported second-quarter revenue that exceeded expectations, but disappointing profits and a lack of future guidance led to a decline in share prices [4]. - FedEx suspended its outlook in June, with its shares trading at levels similar to those seen after that announcement [4]. Group 4: Market Reaction - Despite the downgrades, both companies' stocks experienced a rise in recent trading, driven by optimism surrounding potential interest rate cuts [5].

Group 1 - FedEx Corporation reported solid growth in adjusted operating income and margin expansion for FY25, achieving a two-year $4 billion DRIVE target and adhering to a $2.2 billion structural cost reduction commitment [2][3] - The company reduced capacity on the Asia-to-Americas lane by more than 35% in May 2025 to effectively match demand [2] - FedEx issued €500 million in 3.5% Notes due in 2032 and €350 million in 4.125% Notes due in 2037, which are expected to positively impact its financial structure and operations [3] Group 2 - The company appointed Vishal Talwar as Chief Digital and Information Officer and President of FedEx Dataworks, effective August 15 [3] - FedEx has gained the trust of 67 hedge funds, indicating strong institutional interest that attracts stable income-seeking investors in the freight sector [4] - The stock value of FedEx is projected to increase by approximately 18.57% over the next year [4] Group 3 - FedEx specializes in transportation, e-commerce, and business services, and is recognized as a global leader in the express delivery industry with its "hub and spoke" logistics network [5]

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Group 1: Downgrades and Price Targets - BofA Global Research downgraded United Parcel Service Inc (UPS) to "underperform" from "neutral" and FedEx Corp (FDX) to "neutral" from "buy" [1] - The price target for UPS was cut to $83 from $91, while FDX's price objective was lowered to $240 from $245 [1] Group 2: Stock Performance and Market Trends - UPS was last seen at $84.06, having previously slipped to a five-year low of $82, with a 33.2% deficit projected for 2025 [2] - FDX was last seen trading at $229.82, with support at the $220 region, but has an 18.34% year-to-date deficit [4] Group 3: Options Trading Activity - UPS's 10-day call/put volume ratio of 6.03 indicates that options traders are more bullish than usual, ranking higher than 94% of annual readings [3] - For FDX, options traders have traded 3,805 puts, which is triple the intraday average, compared to 1,781 calls, with the most popular contract being the weekly 9/12 220-strike put [4]

Core Insights - FedEx Corporation (FDX) is scheduled to report its first-quarter fiscal 2026 results on September 18, 2025, after market close [1] - The Zacks Consensus Estimate for earnings is $3.68 per share, reflecting a 2.2% increase from the previous year, while revenues are expected to be $21.8 billion, indicating a 0.8% increase [2] Earnings Performance - FDX has a mixed earnings surprise history, with an average surprise of -5.53% across recent quarters [3][4] - The company is expected to face challenges in average daily shipments due to weak demand and tariff-related tensions [5] Segment Analysis - The Express unit, FDX's largest segment, is anticipated to experience volume weakness, although revenues may increase slightly compared to the first quarter of fiscal 2025 [6] - Cost-reduction initiatives from the DRIVE program are expected to aid bottom-line performance, despite a marginal increase in adjusted operating expenses [7] Strategic Developments - An update on FDX's multi-year deal with Amazon is anticipated, which involves delivering select large packages for the e-commerce giant [7][8] - The FDX-Amazon deal comes after rival UPS decided to lower its volumes with Amazon, indicating a strategic shift in partnerships [9] Market Position - FDX shares have outperformed the Zacks Transportation—Air Freight and Cargo industry, increasing by 5.9% in the first quarter of fiscal 2026, compared to a 3.2% decline in the industry [12] - FDX is trading at a discount based on forward Price/Sales (P/S) ratios compared to the industry average and UPS, with a Value Score of A [14] Long-term Outlook - Despite current challenges, FDX has a long-term earnings growth rate of 10.4%, higher than the industry average of 9.5% [19] - The company has raised its quarterly dividend by 5.1% to $1.45 per share, indicating a commitment to rewarding shareholders [18] Investment Considerations - Current market conditions and uncertainties suggest that it may not be the best time to purchase additional shares of FDX [19][20] - Investors are advised to wait for management's commentary on tariffs and updated guidance before making investment decisions [20]

Core Viewpoint - Bank of America has issued a warning regarding the de minimis impact on United Parcel Service (UPS) and FedEx Corporation (FDX), leading to a downgrade of UPS from Neutral to Underperform [2] Company Analysis - Bank of America downgraded UPS to Underperform, indicating concerns about its performance relative to the market [2] - The warning from Bank of America highlights the significant impact of de minimis factors on both UPS and FedEx, suggesting potential challenges ahead for these companies [2] Industry Implications - The downgrade of UPS may reflect broader industry challenges that could affect the logistics and delivery sector, particularly in relation to market performance and competitive positioning [2]

Core Insights - The article discusses the busy schedule of corporate events, including Analyst Days and Shareholder Meetings, which can provide valuable insights into companies' short-term trends and strategic plans [1][2][3] Company Events - Uber Technologies participated in a Fireside Chat with Goldman Sachs analysts, while Visa, Apple, and Nike are hosting significant events this week [2] - CrowdStrike's Analyst Day is scheduled for September 17, following a stock price decline of over 20% from its peak of $518 in early July, despite strong revenue and earnings performance [6][9] - Wynn Resorts will hold its Analyst Day on September 19, with shares nearly doubling since April, although recent reports indicate challenges in the Las Vegas tourism sector [7][9] - Alibaba's Shareholder Meeting is set for September 25, with the company recently announcing the development of new AI chips, positioning itself competitively in the tech sector [10] - FedEx's Shareholder Meeting is on September 29, with expectations for clarity on its Freight division spinoff amid a 20% stock price decline over the past year [11] Economic Context - The article highlights the upcoming macroeconomic data releases, including retail sales and Federal Reserve policy decisions, which could impact market sentiment and company performance [4][5][12] - The Cboe Volatility Index (VIX) is currently around 15, indicating modest expected volatility in the S&P 500, suggesting a stable market environment for the time being [12]

Group 1 - FedEx Corporation has been underperforming the market for an extended period [1] - United Parcel Service, Inc. is experiencing similar underperformance in the parcel delivery sector [1] Group 2 - The analysis is conducted by a team with backgrounds in business and finance from top universities [1] - The team specializes in macroeconomics, commodities, currencies, and the U.S. stock market [1]

Core Viewpoint - FedEx Corporation's (FDX) strong segmental performance and operational efficiency are enhancing its prospects, supported by fleet modernization initiatives, leading to impressive share price performance [1] Group 1: Earnings and Stock Performance - The Zacks Consensus Estimate for FDX's earnings per share has been revised upward by 0.33% for the current fiscal year and by 0.10% for fiscal 2026, indicating broker confidence [2] - FDX shares have increased by 3.9% over the past year, outperforming the Zacks Transportation - Air Freight and Cargo industry's 5% decline [3] - FDX currently holds a Zacks Rank 2 (Buy), with its industry ranking at 34 out of 245, placing it in the top 14% of Zacks Industries [4] Group 2: Operational Strengths - FedEx achieved the IATA CEIV Pharma Corporate Certification in May 2025, enhancing its leadership in the pharmaceutical logistics market and reinforcing customer trust [6][9] - More than 90% of FedEx's global healthcare volume is now processed through CEIV Pharma-certified facilities, positioning healthcare as a critical growth driver [9] - The Federal Express segment showed improvement in Q4 of fiscal 2025, supported by DRIVE cost efficiencies and stronger export volumes, while the Freight segment offset headwinds through pricing discipline [10] Group 3: Fleet Modernization and Cost Efficiency - FedEx is advancing its fleet modernization strategy by retiring older aircraft, which will enhance long-term efficiency [11] - The company reported significantly lower one-time costs compared to the previous year, indicating progress toward a leaner and more efficient business model [11]