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Friday - Stephens analysts have adjusted the price target for FedEx (NYSE:FDX) shares to $300 from the previous $320, while still maintaining an Overweight rating on the stock. The readjustment comes after FedEx reported its third-quarter earnings for fiscal year 2025. With a current market capitalization of $59.3 billion and trading near its 52-week low, InvestingPro analysis suggests FedEx is currently undervalued, presenting a potential opportunity for investors.
FedEx’s adjusted earnings per share (EPS) for the third quarter were $4.51, slightly surpassing Stephens’ projection of $4.39 but falling short of the consensus estimate of $4.56. The results were buoyed by better-than-expected volumes in the Express segment and freight tonnage. The company, which generated $87.39 billion in revenue over the last twelve months with an EBITDA of $10.87 billion, has revised its full-year adjusted EPS guidance downward to the range of $18.00 to $18.60, citing softer revenue and persistent cost inflation. (InvestingPro subscribers have access to 8 additional key insights about FedEx’s financial performance.)
Despite the lowered guidance, FedEx has shown progress in its cost-saving initiatives, with approximately $600 million in benefits realized during the third quarter as part of its DRIVE program. The company is on track to meet its annual cost-saving target of $2.2 billion. These savings, along with the implementation of Network 2.0, are expected to provide significant EBIT tailwinds for fiscal year 2026. The company maintains a solid financial foundation with a Fair overall health score according to InvestingPro metrics, and has demonstrated its commitment to shareholder returns through a 2.24% dividend yield and four consecutive years of dividend increases.
Additionally, FedEx commented on the competitive pricing environment, noting that parcel pricing remains rational despite volume fluctuations experienced by its largest competitor. The planned spin-off of its less-than-truckload (LTL) business is proceeding as scheduled, with the market anticipating the announcement of a CEO for the new entity as the next significant development for investors to watch.
Stephens reaffirmed its Overweight rating on FedEx shares, signaling confidence in the company’s future performance despite the revised price target. The firm’s analysts expect the cost-saving measures and strategic initiatives to contribute positively to FedEx’s financials in the upcoming fiscal year.
In other recent news, FedEx reported mixed financial results for its third quarter of fiscal 2025. The company announced an adjusted earnings per share (EPS) of $4.51, which fell short of the consensus estimate of $4.61. However, FedEx’s revenue exceeded expectations, reaching $22.2 billion against the anticipated $21.92 billion. Following these results, several financial firms adjusted their outlooks on FedEx. Stifel lowered its price target to $354 from $364, while Evercore ISI reduced its target to $276 from $290, maintaining an Outperform rating. Raymond (NSE:RYMD) James also cut its price target to $290 from $320, expressing confidence in FedEx’s transformation initiatives. Meanwhile, Morgan Stanley (NYSE:MS) maintained an Underweight rating with a $200 price target, citing concerns over structural market changes and earnings volatility. Despite these challenges, FedEx is on track to achieve its $2.2 billion DRIVE cost reduction target for the year, with $670 million expected in the fourth quarter.
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