FedEx stock price target lowered to $239 at Evercore ISI on margin concerns

Investing.com - Evercore ISI has lowered its price target on FedEx (NYSE:FDX) to $239.00 from $243.00 while maintaining an "In Line" rating, citing margin concerns and global trade uncertainties. The logistics giant, currently valued at $53.4 billion and trading at a P/E ratio of 13.4x, appears undervalued according to InvestingPro Fair Value analysis.

The adjustment follows FedEx’s fiscal first-quarter 2026 adjusted earnings per share of $3.83, which exceeded Evercore’s estimate of $3.63 and the average Street forecast of $3.60. The earnings beat was primarily driven by yield improvements throughout the Federal Express unit, along with modest volume growth, which offset higher cost per package and underperformance in the Freight business. With annual revenue of $88.6 billion and a solid dividend yield of 2.56%, FedEx maintains a "GOOD" Financial Health Score on InvestingPro, which offers comprehensive analysis through its Pro Research Reports.

FedEx has reinstated its fiscal year 2026 EPS guidance range of $17.20-19.00, based on projected revenue growth of 4-6%, $1 billion in core cost savings, and a $200 million reduction in pension contributions. The midpoint of this guidance falls below the average Street projection of $18.48 but exceeds buy-side expectations of $17.25-17.50.

Evercore reduced its fiscal year 2026 EPS estimate to $17.70 from $17.99, despite increasing its revenue forecast by nearly $3 billion. The firm noted that margins at both Federal Express and Freight divisions are anticipated to decline year-over-year for the remainder of the fiscal year, though the Freight segment’s decline is expected to be less severe than in the first quarter.

Global trade uncertainties, including tariffs and de minimis exemptions, are projected to impact FedEx’s operating income by $850 million over the final three quarters of the fiscal year, following a $150 million impact in the first quarter. These factors, combined with structural competitive advancements, are expected to limit both EPS growth and multiple expansion for at least the next 6-9 months. InvestingPro data reveals that 12 analysts have recently revised their earnings estimates downward, though the company maintains its position as a prominent player in the Air Freight & Logistics industry. Discover more detailed insights and 6 additional ProTips with an InvestingPro subscription.

In other recent news, FedEx reported its first-quarter fiscal 2026 earnings, with earnings per share of $3.83, surpassing the consensus estimate of $3.60. UBS highlighted this strong performance by raising its price target on FedEx to $314 from $293, maintaining a Buy rating. Jefferies also increased its price target to $280 from $275, describing the results as "better than feared" following previous earnings challenges. Similarly, TD Cowen raised its price target to $271 from $269, acknowledging FedEx’s ability to beat expectations despite some challenges in its Freight segment. Wells Fargo adjusted its price target to $250 from $235, maintaining an Equal Weight rating and noting that the revenue guidance appears "somewhat optimistic." However, BMO Capital took a slightly different stance, lowering its price target to $255 from $260 while keeping a Market Perform rating, citing that guidance for adjusted EBIT and EPS came in below expectations. These developments reflect a mixed but generally positive outlook from analysts following FedEx’s recent earnings release.

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