EU and US could reach trade deal this weekend - Reuters
On Friday, BMO Capital Markets adjusted its outlook on FedEx stock (NYSE:FDX), reducing the price target from $275.00 to $260.00, while keeping a Market Perform rating on the shares. The revision comes amid current challenges faced by the company, including weaker than expected demand and a lack of clarity on the timing of a market turnaround. According to InvestingPro data, FedEx currently trades at a P/E ratio of 14.15 and appears slightly undervalued based on its Fair Value analysis.
Fadi Chamoun, an analyst at BMO Capital, explained that FedEx is predominantly engaged in business-to-business (B2B) freight and is experiencing transformational cost savings. These savings should position the company favorably for a potential rebound in demand. With annual revenue of $87.81 billion and a strong dividend history spanning 24 consecutive years, FedEx maintains a solid financial foundation. However, in the near term, FedEx is witnessing demand that is not meeting typical seasonal patterns. Furthermore, the company is navigating through a period marked by considerable macroeconomic and trade policy uncertainties.
Due to these factors, BMO Capital has revised its earnings per share (EPS) estimates for FedEx. The firm lowered its Q4/FY2025 EPS forecast by 5% and its FY2026 projection by 7%. Despite the reduction in the price target, BMO Capital has chosen to maintain its Market Perform rating for FedEx stock.
Chamoun’s commentary highlighted the rationale behind the firm’s decision: "FDX is heavily weighted to B2B freight, and in light of the transformational costs savings being realized, the company is likely well positioned for when demand recovers. In the immediate term, however, demand is underperforming typical seasonality and there is limited visibility into an inflection point amid significant macro and trade policy related uncertainty. We are lowering our Q4/F25 EPS by 5% and F2026 by 7%. Maintaining Market Perform rating and lowering our target to $260 from $275."
Investors and market watchers will be keeping an eye on FedEx as it continues to navigate the current economic landscape and the impact of its cost-saving measures on long-term performance. For deeper insights into FedEx’s financial health, growth prospects, and additional ProTips, visit InvestingPro, where you’ll find comprehensive analysis and the detailed Pro Research Report covering what really matters for informed investment decisions.
In other recent news, FedEx reported its third-quarter fiscal year 2025 earnings, revealing an adjusted earnings per share (EPS) of $4.51, which was slightly below the consensus estimate of $4.56. The company also revised its full-year adjusted EPS guidance downward to a range of $18.00 to $18.60, citing softer revenue and persistent cost inflation. Despite these challenges, FedEx’s total revenues exceeded expectations, with significant contributions from its Ground segment. Analysts from Stephens, Stifel, and JPMorgan have adjusted their price targets for FedEx, reflecting a cautious outlook amid economic uncertainties. Stephens lowered the target to $300, maintaining an Overweight rating, while Stifel reduced it to $354, keeping a Buy rating. JPMorgan also decreased its price target to $280, retaining an Overweight rating, and noted concerns about FedEx’s economic outlook for the latter half of 2025. BofA Securities lowered its price target to $270 but reaffirmed a Buy rating, highlighting FedEx’s structural cost transformation efforts. Meanwhile, Bernstein maintained a Market Perform rating with a $282 price target, noting ongoing trade negotiations and investor sentiment challenges.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.