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On Tuesday, Bernstein analysts, led by David Vernon, upheld their Market Perform rating on FedEx (NYSE:FDX) stock, with a steady price target of $282.00, while the stock currently trades at $231.97. According to InvestingPro data, analyst targets range from $200 to $354, with the company currently appearing undervalued based on Fair Value analysis. The affirmation follows a recent investor webcast featuring FedEx CFO John Dietrich and CMO Brie Carrere, where they discussed the company’s stance on tariffs and investor sentiment.
During the webcast, FedEx expressed relief at the progress made in trade negotiations, advocating for reduced trade barriers. However, the company experienced a decrease in air volumes following the end of de minimis exemptions, which allow small shipments to enter the United States tax-free. While some recovery in air demand is anticipated, FedEx remains cautious and does not foresee an immediate spike in air freight demand. Despite these challenges, the company maintains strong fundamentals with $87.8 billion in revenue and a healthy gross profit margin of 27.2%. The company is also actively addressing tariff washing and lower-cost postal routings to prevent any unintended consequences from recent rule changes.
FedEx officials anticipate a temporary increase in export volumes as businesses attempt to get ahead of the 90-day deadline for new trade regulations. However, they are reserving judgment on the long-term impact until more data becomes available.
The webcast also touched on the current investor sentiment towards the company. Despite a generally positive message, feedback suggests that investors were not fully satisfied with the delivery of the information. Concerns persist among investors regarding the pricing dynamics in the small package sector and the competitive landscape. Moreover, FedEx’s comments on backhaul pricing—which refers to the transportation of goods on a return trip—were not seen as encouraging. This is because stability in the market is questioned when companies display aggressive competitive behavior, as implied by FedEx’s approach during the call.
Bernstein’s analysis comes at a time when FedEx and the logistics industry are navigating through changes in international trade regulations and competitive pressures. The firm’s reiteration of the Market Perform rating and price target reflects a watchful stance on FedEx’s performance amid these evolving market conditions. InvestingPro subscribers have access to additional insights, including 7 more ProTips and a comprehensive Pro Research Report that provides deep-dive analysis of FedEx’s financial health, competitive position, and growth prospects. The company’s overall financial health score of 2.45 (FAIR) suggests stable performance despite market uncertainties.
In other recent news, FedEx has reported its third-quarter fiscal 2025 earnings, revealing an adjusted earnings per share (EPS) of $4.51. This figure slightly surpassed some analyst expectations but fell short of the consensus estimate of $4.56. The company has revised its full-year adjusted EPS guidance downward to a range of $18.00 to $18.60, citing softer revenue and ongoing cost inflation. Analysts from Stephens, Evercore ISI, JPMorgan, and Stifel have all adjusted their price targets for FedEx, with figures now ranging from $276 to $354. Despite these adjustments, FedEx’s strategic cost-saving initiatives, such as the DRIVE program, have realized approximately $600 million in benefits in the third quarter alone. The company is on track to meet its annual cost-saving target of $2.2 billion, which is expected to provide significant EBIT tailwinds for fiscal year 2026. FedEx is also proceeding with the planned spin-off of its less-than-truckload business, with the market anticipating the announcement of a CEO for the new entity. Despite the challenges, several analysts have maintained positive ratings on FedEx stock, indicating continued confidence in the company’s long-term potential.
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