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On Wednesday, Evercore ISI adjusted its outlook on FedEx Corporation (NYSE:FDX), decreasing the price target to $290 from the previous $319 while maintaining an Outperform rating. The revision comes ahead of the company’s third-quarter fiscal 2025 earnings report set to be released tomorrow night. With a current market capitalization of $59.2 billion and trading near its 52-week low, InvestingPro analysis suggests FedEx is currently undervalued, making it an interesting watch for value investors.
The change in price target by Evercore ISI reflects a cautious stance due to several factors impacting FedEx’s recent performance. Analysts cite severe weather conditions, delayed datasets from China, and growing macroeconomic and policy uncertainties as key challenges. Despite these issues, analysts noted that FedEx experienced favorable volume and pricing momentum during December’s peak period. However, the subsequent months have been marked by extreme weather events and an earlier Chinese New Year, which has disrupted both comparisons and macroeconomic data points. According to InvestingPro data, FedEx has maintained dividend payments for 24 consecutive years, demonstrating remarkable financial stability despite market challenges.
Evercore ISI analysts have also taken into account the shift in market sentiment, from the optimism of the Trump Bump to recession fears by the end of February. They acknowledge the difficulties in predicting the financial impact of known unknowns, such as wildfires, winter weather, and international export volume trends. The analysts also highlighted that issues like market sentiment and uncertainty are currently easier to gauge than actual financial outcomes.
In their analysis, Evercore ISI examined retail sales, industrial production, and China exports data to forecast volume and revenue for FedEx. Although January and February saw robust retail sales growth, industrial production showed signs of contracting less, offering some balance to the deceleration in retail sales. The trend in China’s exports remains uncertain due to the country’s practice of reporting January and February data together.
As a result of these observations and analyses, Evercore ISI has lowered its EPS estimate for FedEx’s third quarter of fiscal 2025 to $4.38 from $4.41. The firm’s forecasts for fiscal years 2025 and 2026 have also been adjusted to $18.85 (down from $19.08) and $22.33 (down from $22.80), respectively. The revised price target of $290 is based on the lower FY26 EPS projection and a reassessment of the sum-of-the-parts valuation in light of peer-group sell-offs. Currently trading at a P/E ratio of 15.48x with annual revenue of $87.39 billion, FedEx maintains a solid financial position. For deeper insights into FedEx’s valuation and comprehensive analysis, investors can access the detailed Pro Research Report available on InvestingPro, which covers over 1,400 top US stocks.
In other recent news, FedEx is preparing to release its earnings report for the third fiscal quarter of 2025, with analysts closely monitoring whether the company will adjust its full-year earnings outlook. Citi analyst Ariel Rosa maintained a Buy rating on FedEx but lowered the price target to $317, highlighting investor concerns about potential further guidance reductions. Meanwhile, Bernstein significantly cut FedEx’s price target from $320 to $202, citing challenges in end markets and global trade uncertainties. Analyst David Vernon from Bernstein noted that the anticipated benefits from FedEx’s initiatives might be dampened by these factors, and he expects the company’s 2026 earnings to be 10% lower than consensus estimates.
Additionally, FedEx has temporarily halted economy parcel and freight services to Saudi Arabia from several countries, including Brazil and China, without providing a timeline for resumption. On another note, GXO Logistics faced a price target reduction from Citi, now set at $56, due to foreign exchange headwinds affecting its revenue from the U.K. and Europe. The weakening of the British Pound and Euro against the U.S. Dollar has led Citi to lower GXO’s adjusted EBITDA estimates for the upcoming years. Meanwhile, Dexterity Inc., an AI robotics firm, achieved a $1.65 billion valuation following a recent funding round, underscoring the growing interest in AI-driven industrial solutions.
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