Evercore ISI cuts FedEx stock price target to $276

On Friday, Evercore ISI analyst Jonathan Chappell adjusted the price target for FedEx (NYSE:FDX) shares, reducing it to $276 from the previous $290, while maintaining an Outperform rating on the company’s stock. The revision follows FedEx’s release of its third-quarter fiscal 2025 earnings, which reported an adjusted earnings per share (EPS) of $4.51. This figure surpassed Evercore ISI’s revised estimate of $4.38 but fell slightly short of the average forecast by Wall Street analysts by $0.05. The company, currently valued at $59.3 billion, trades at a P/E ratio of 15.47x. According to InvestingPro data, eight analysts have recently revised their earnings estimates downward for the upcoming period.

The company also revised its full-year fiscal 2025 EPS guidance downward to a range of $18.00 to $18.60, a decrease from the previously projected $19 to $20 range. This adjustment is attributed to a persistently sluggish industrial economy and ongoing cost inflation pressures. Although the reduction in guidance was anticipated, the extent of the cut, especially with only one quarter remaining, was more significant than expected. Despite these challenges, InvestingPro analysis shows FedEx maintains strong fundamentals with annual revenue of $87.39 billion and a steady dividend yield of 2.24%, having maintained dividend payments for 24 consecutive years.

Despite these challenges, FedEx is on track to achieve its $2.2 billion DRIVE cost reduction target for the year, with $670 million slated for realization in the fourth quarter, following a $600 million reduction in the third quarter. The company has also maintained robust pricing, which is considered a crucial factor for the current fiscal year. However, the company’s outlook for fiscal year 2026 is less optimistic, with Evercore ISI now estimating an EPS of $21.22, down from the previous $22.33 estimate.

FedEx’s less-than-expected low-single-digit EPS growth projections, combined with flat to potentially declining revenue, contrast sharply with the more optimistic expectations at the beginning of the year. Additionally, the timeline for the spinoff of its less-than-truckload (LTL) segment is projected to extend well into 2026, and the company is experiencing softening margins within its Freight unit. Given the challenging macroeconomic environment and downward pressure on peer comparisons in the LTL and parcel sectors, Evercore ISI has also recalibrated its sum-of-the-parts valuation for FedEx.

In conclusion, while Evercore ISI has lowered its price target for FedEx, the Outperform rating remains unchanged, suggesting that the firm still sees potential in the stock despite the recent adjustments to financial forecasts and market conditions. InvestingPro analysis indicates the stock is currently trading below its Fair Value, presenting a potential opportunity for investors. For deeper insights into FedEx’s valuation and 10+ additional exclusive ProTips, explore the comprehensive Pro Research Report available on InvestingPro.

In other recent news, FedEx Corporation reported mixed results for its Q3 2025 earnings, with earnings per share (EPS) falling short at $4.51 against the forecasted $4.61, but revenue surpassing expectations at $22.2 billion compared to the anticipated $21.92 billion. The company achieved a 2% year-over-year revenue growth and realized $600 million in cost savings through its DRIVE initiative, though it lowered its EPS guidance for the fiscal year to $18-$18.60 from the previous range of $19-$20. Additionally, FedEx is undergoing significant strategic changes, including the planned separation of its Freight division into an independent entity, which is expected to enhance operational scrutiny and potentially improve performance.

Analysts have weighed in on FedEx’s current position, with Raymond (NSE:RYMD) James lowering the stock price target to $290 but maintaining an Outperform rating, citing confidence in the company’s transformation initiatives. In contrast, Morgan Stanley (NYSE:MS) reaffirmed an Underweight rating, maintaining a $200 price target due to concerns over earnings pressures and structural market challenges. They highlighted risks from macroeconomic factors and competition, particularly from Amazon (NASDAQ:AMZN) and UPS, which they believe are affecting FedEx’s earnings more than anticipated.

FedEx’s management remains focused on transformation efforts, such as the integration of FedEx Express and Ground services under Network 2.0 and a rigorous approach to capital expenditure. The company continues to face challenges from a weak industrial economy and inflationary cost pressures, but it is committed to long-term value creation through strategic initiatives. Despite the mixed earnings report and varied analyst outlooks, FedEx is actively pursuing strategies to improve efficiency and shareholder value.

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