Core Viewpoint - FedEx Corporation reported mixed results for the third quarter of fiscal 2025, with earnings missing estimates while revenues exceeded expectations, indicating a complex financial landscape for the company. Financial Performance - Quarterly earnings, excluding non-recurring items, were $4.51 per share, missing the Zacks Consensus Estimate of $4.65, but representing a 16.8% year-over-year improvement [1] - Revenues reached $22.2 billion, surpassing the Zacks Consensus Estimate of $21.8 billion and showing a 2.1% increase from the previous year [2] - Operating income increased by 4% to $1.29 billion, with operating margin rising to 5.8% from 5.7% year-over-year [3] Segmental Performance - The FedEx Express segment's revenues grew by 3% year-over-year to $19.1 billion, driven by cost reductions and increased export volume, although offset by higher wage rates and the expiration of a contract with the U.S. Postal Service [5] - FedEx Freight revenues fell by 5% year-over-year to $2.08 billion, impacted by lower fuel surcharges and reduced shipment volumes, despite a higher base yield [6][4] Liquidity and Capital Management - FedEx ended the quarter with cash and cash equivalents of $5.14 billion, up from $5.02 billion in the previous quarter, while long-term debt slightly increased to $19.5 billion [7] - The company completed a $2.5 billion share repurchase plan, repurchasing $0.5 billion worth of shares during the quarter, which positively impacted earnings per share by 12 cents [8] Fiscal 2025 Outlook - FedEx updated its full-year guidance, now expecting revenues to be flat to slightly down year-over-year, with EPS projected between $15.15 and $15.75, a decrease from the previous estimate of $16.45 to $17.45 [9][10]

Core Viewpoint - UPS shares declined by 3.4% in pre-market trading, influenced by a significant drop in FedEx shares following its disappointing earnings report [1][2] Group 1: FedEx's Earnings Impact - FedEx's fiscal third-quarter 2025 earnings report indicated a cut in its full-year revenue outlook to "flat to slightly down year over year," contrasting with previous guidance for flat sales in 2024 [3] - FedEx's CFO highlighted ongoing weakness and uncertainty in the U.S. industrial economy, which is negatively affecting demand for business-to-business services [3] Group 2: Implications for UPS - The decline in FedEx's outlook suggests that UPS may also experience similar challenges, particularly in capturing weak trading conditions in March [3] - Specific weakness in business-to-business deliveries could negatively impact UPS's margins, as these are typically higher-margin activities [4] - Investors in UPS should brace for potential near-term disappointments, although the long-term growth prospects remain positive [4]

Core Viewpoint - FedEx Corp's stock is experiencing a significant decline, down 11.2% to $218.29, marking its lowest level since June 2023, following a fiscal third-quarter earnings miss and a third consecutive cut in profit outlook due to weakness in the U.S. industrial economy [1] Group 1 - The company reported a fiscal third-quarter earnings miss and cut its profit outlook for the third time, citing "continued weakness and uncertainty in the U.S. industrial economy" [1] - Analysts have reacted by slashing price targets, with J.P. Morgan Securities reducing its target from $372 to $323 and Loop Capital downgrading the shares to "sell" from "hold" [2] - The stock has fallen below recent support at $240 and is on track for its third consecutive weekly loss, with a year-to-date decline of 21.9% [2] Group 2 - Among the 33 analysts covering the stock, 21 still maintain a "buy" or better rating, with a 12-month consensus price target of $312.15, indicating a 41.4% premium to current levels [3] - The presence of a significant number of "buy" ratings suggests potential for recovery, although bear notes may pose short-term challenges [3]

FedEx TodayFDXFedEx$223.71 -22.50 (-9.14%) 52-Week Range$217.22▼$313.84Dividend Yield2.47%P/E Ratio14.28Price Target$304.68Add to WatchlistFedEx NYSE: FDX reported growth and signs of sustainable improvement in its FQ3 earnings report, but H1 2025 is an unlikely time to buy the stock. The company’s results are mixed in a bad way, with weak margins offset by strong revenue, and guidance was reduced. The takeaway is that headwinds continue to impact the market sentiment and will likely lead to lower stock pr ...

Core Insights - FedEx Corp. reported weaker-than-expected earnings for Q3, with earnings per share at $4.51, missing the analyst consensus estimate of $4.54, while quarterly revenue was $22.2 billion, exceeding the estimate of $21.89 billion and up from $21.7 billion year-over-year [1][3] Financial Performance - The company experienced improved profitability despite a challenging operating environment, which included a compressed peak season and severe weather events, as noted by CEO Raj Subramaniam [2] - FedEx is unable to forecast fiscal 2025 mark-to-market retirement plans accounting adjustments, leading to no guidance on earnings per share or effective tax rate for that fiscal year. The revenue outlook for fiscal 2025 is now expected to be flat to slightly down year-over-year, compared to a prior forecast of approximately flat [3] Stock Market Reaction - Following the earnings announcement, FedEx shares fell by 11%, trading at $219.21 [3] Analyst Ratings and Price Targets - Analysts have adjusted their price targets for FedEx post-earnings, with various ratings and target changes: - B of A Securities maintained a Buy rating, lowering the target from $295 to $272 - Stifel maintained a Buy rating, lowering the target from $364 to $354 - Raymond James maintained an Outperform rating, lowering the target from $320 to $290 - Loop Capital downgraded from Hold to Sell, cutting the target from $283 to $221 - BMO Capital maintained Market Perform, lowering the target from $330 to $275 - Stephens & Co. maintained Overweight, lowering the target from $320 to $300 - Wells Fargo maintained Equal-Weight, lowering the target from $275 to $260 [4]

Core Viewpoint - U.S. stock futures are lower, with notable declines in pre-market trading for several companies, particularly Micron Technology, which reported strong earnings but saw its shares drop. Group 1: Micron Technology, Inc. - Micron reported second-quarter revenue of $8.05 billion, exceeding the consensus estimate of $7.89 billion and up from $5.82 billion year-over-year [2] - The company achieved adjusted earnings of $1.56 per share, surpassing analyst estimates of $1.42 per share [2] - For the third quarter, Micron expects revenue of $8.8 billion, plus or minus $200 million, compared to estimates of $8.49 billion, and anticipates adjusted earnings of $1.57 per share, plus or minus 10 cents, versus estimates of $1.47 per share [3] Group 2: Other Companies in Pre-Market Trading - InnovAge Holding Corp. shares fell 20% to $2.60 [5] - MAC Copper Limited shares decreased by 14.8% to $9.15 [5] - Riverview Bancorp, Inc. shares dropped 11% to $4.80 [5] - Benitec Biopharma Inc. shares fell 10.4% to $15.01 following interim clinical results [5] - Satellogic Inc. shares declined 9.7% to $3.61 [5] - Planet Labs PBC shares decreased by 8.5% to $3.88 after weak fourth-quarter results [5] - FedEx Corporation shares dipped 7.7% to $227.30, reporting weaker-than-expected earnings for its third quarter [5] - NIO Inc. shares fell 6% to $4.43 following weak quarterly results [5] - NIKE, Inc. shares decreased by 5.6% to $67.84, despite reporting better-than-expected third-quarter financial results with revenue of $11.27 billion [5]

Financial Data and Key Metrics Changes - Revenue increased by 2% year-over-year for the first time this fiscal year, reaching a total of $XX billion [7] - Adjusted operating income grew by 12% compared to last year, with $600 million in DRIVE savings achieved in the quarter [8][22] - Adjusted EPS growth was reported at 17% [41] Business Line Data and Key Metrics Changes - Federal Express saw a revenue increase of 3%, driven by higher volume in deferred services [27] - FedEx Freight experienced a 5% revenue decline due to lower volumes and fuel surcharges [27] - Overall volume trends improved, with a 5% growth in Federal Express package volume [28] Market Data and Key Metrics Changes - Nearly 75% of revenue comes from U.S. domestic services, with 10% from non-U.S. intra-country or intra-regional services [12] - International export package volumes increased by 8% due to growth in the international economy [29] - Average daily pounds for international priority freight increased by 3% [30] Company Strategy and Development Direction - The company is focused on creating a more flexible, efficient, and intelligent network, with plans to optimize 45 more U.S. stations in Q4 [14] - The DRIVE initiative aims for a total of $2.2 billion in savings for FY '25, with a total of $4 billion from the FY '23 baseline [13] - The acquisition of RouteSmart Technologies is expected to enhance route optimization and operational efficiency [20] Management's Comments on Operating Environment and Future Outlook - The current environment adds uncertainty to demand, particularly in the industrial economy, which continues to pressure higher-margin B2B volumes [9] - The company is lowering its FY '25 adjusted EPS outlook to $18 to $18.60 due to inflationary pressures and uncertain demand [18][48] - Management remains confident in the long-term value creation from transformation initiatives like DRIVE and Network 2.0% [23] Other Important Information - The company completed approximately $500 million in share repurchases in Q3, with a target of returning $3.8 billion to shareholders in FY '25 [55] - Capital expenditures for FY '25 are now projected at $4.9 billion, down from $5.2 billion last year [55] - The company is on track to fully separate FedEx Freight, with a separation management office established [58] Q&A Session Summary Question: Impact of inflation on guidance change - Management indicated that inflation has been a consistent factor affecting guidance, particularly regarding wages and operational costs [65] Question: FedEx's exposure to de minimis shipments - Management stated they are operationally prepared for changes related to de minimis shipments and are working closely with customers to adapt [70][72] Question: Outlook for fiscal '26 - Management refrained from providing specific guidance but emphasized a focus on profitable growth and the annualization of DRIVE benefits [76][78] Question: Update on dedicated sales force - The dedicated sales team is being built to enhance expertise in LTL and improve coverage for small and medium customers [90] Question: Network 2.0% productivity benefits - Management reported solid service levels and a goal of a 10% reduction in B&D costs with the rollout of Network 2.0% [96] Question: LTL margins outlook - Management expressed confidence in LTL margins rebounding once the B2B business improves, focusing on quality growth [100] Question: Pricing environment and customer feedback - Management noted that the pricing environment remains rational, with customers anticipating price increases due to inflation [115]

Market Overview - The Dow finished down -11 points (-0.027%) after reaching an intra-day high of +286 points [1] - The S&P 500 lost -12 points (-0.22%), the Nasdaq was down -59 points (-0.33%), and the Russell 2000 fell -13 points (-0.65%) [1] Existing Home Sales - February Existing Home Sales reached 4.26 million seasonally adjusted annualized units, exceeding the estimate of 3.95 million and the previous month's 4.08 million [2] - The average median price of existing homes increased by +3.8% year over year to $398.4K [2] Leading Economic Indicators - U.S. Leading Economic Indicators (LEI) for February decreased by -0.3%, down from +0.2% in the prior quarter and lower than the anticipated -0.2% [3] - The LEI is now at -1.0% over the trailing six months, an improvement from -2.1% in the previous six months [3] - New manufacturing orders declined, and consumer sentiment remains fragile, with 2025 GDP now estimated at +2.0% [3] Earnings Reports - NIKE (NKE) reported fiscal Q3 earnings per share of 54 cents, surpassing the Zacks consensus estimate of 28 cents, with revenues of $11.27 billion exceeding expectations of $11.11 billion [5] - NIKE's margins were slightly soft at +41.5%, with the Chinese market underperforming [5] - FedEx (FDX) reported fiscal Q3 earnings of $4.51 per share, below the Zacks consensus of $4.65, while revenues were $22.2 billion, exceeding expectations of $21.89 billion [7] - FedEx's full-year earnings are now expected to be between $18.00 and $18.60 per share, down from the prior estimate of $19.27 [7] - Micron (MU) posted fiscal Q2 earnings of $1.56 per share and revenues of $8.05 billion, both exceeding expectations [8] - Micron has guided for a record revenue quarter in Q3, projecting $8.8 billion, with full-year revenues expected to reach $37.9 billion [8]

Core Insights - FedEx reported revenue of $22.16 billion for the quarter ended February 2025, a year-over-year increase of 2.1% [1] - The company's EPS for the same period was $4.51, compared to $3.86 a year ago, but fell short of the consensus estimate of $4.65, resulting in an EPS surprise of -3.01% [1] Financial Performance Metrics - FedEx Express segment revenue was $19.18 billion, exceeding the six-analyst average estimate of $18.89 billion, with a year-over-year change of +89.9% [4] - FedEx Freight segment revenue was $2.09 billion, matching the six-analyst average estimate, but reflecting a year-over-year decline of -1.7% [4] - Total freight revenue for FedEx Express was $1.31 billion, below the $1.35 billion average estimate, representing a year-over-year decrease of -17.7% [4] - Average daily package volume for FedEx Express was 17.87 million, surpassing the four-analyst average estimate of 17.19 million [4] - Average daily freight pounds for FedEx Express in the U.S. was 2.2 million, lower than the 2.59 million estimated by four analysts [4] Stock Performance - FedEx shares have returned -7.4% over the past month, slightly outperforming the Zacks S&P 500 composite's -7.5% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Performance - Revenue for Q3 FY25 reached $22.2 billion, a 2% year-over-year increase[9] - Adjusted operating income for Q3 FY25 was $1.51 billion, a 12% year-over-year increase[9] - Adjusted operating margin for Q3 FY25 was 6.8%, a 60 basis points increase[9] - Adjusted diluted EPS for Q3 FY25 was $4.51, a 17% year-over-year increase[9] Segment Performance - Federal Express revenue increased by 3% to $19.2 billion in Q3 FY25[15] - FedEx Freight revenue decreased by 5% to $2.1 billion in Q3 FY25[15] - DRIVE program delivered $600 million in structural cost savings in Q3[12, 26] Outlook and Capital Allocation - Revised FY25 adjusted diluted EPS outlook to a range of $18.00 - $18.60[12] - FY25 capital expenditure is anticipated to be $4.9 billion, down $300 million year-over-year[32] - Expect to return $3.8 billion to stockholders in FY25 through stock repurchases and dividends[32]