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

Core Viewpoint - FedEx Corp reported disappointing fiscal first-quarter results, leading to a significant decline in share price and downward revisions in earnings and revenue guidance from analysts [1][2][4]. Analyst Ratings and Price Targets - BMO Capital Markets maintained a Market Perform rating, reducing the price target from $325 to $300 [1]. - Stifel kept a Buy rating but lowered the price target from $327 to $321 [1]. - Goldman Sachs reaffirmed a Buy rating while cutting the price target from $332 to $328 [1]. - Stephens maintained an Overweight rating with a price target of $350 [1]. Financial Performance - FedEx's adjusted EBIT was reported at $1,208 million and earnings per share at $3.60, both below consensus estimates of $1,611 million and $4.75 per share, respectively [2]. - The results were impacted by softer demand and a shift towards lower-yielding products, with adjusted earnings nearly 25% below consensus [2][3]. Guidance Revisions - Management lowered adjusted earnings guidance for fiscal 2025 to $20-$21 per share from a previous forecast of $20-$22 per share [4]. - Revenue growth guidance was revised down to low-single-digits from low to mid-single-digits [4]. - Analysts noted ongoing volume-related mix pressures and their potential impact on margins for the remainder of the year [4]. Cost Management and Savings - The DRIVE program is expected to deliver $2.2 billion in structural cost savings in fiscal 2025, although the savings this quarter were less material than anticipated [2][3]. - Management expects cost savings to ramp up sequentially and is implementing revenue management initiatives to address yield pressure [3]. Market Reaction - Shares of FedEx declined by over 15.5%, trading at $253.76 at the time of publication [5].