Evercore cuts FedEx to In Line on softer demand, lower earnings forecasts

Investing.com -- Evercore ISI downgraded FedEx (NYSE:FDX) to In Line from Outperform and cut its price target to $243 from $249, pointing to softening demand trends that threaten near-term earnings.

The broker said August data came in worse than expected, particularly in industrial production and retail sales, requiring a reduction to its forecasts, with fiscal 2026 (FY26) earnings per share (EPS) now seen at $17.99 versus $19.16 previously.

Evercore analysts noted that the company’s recent resilience in the stock price — up 0.3% over the last three months compared with a nearly 16% decline for its main peer — has left “little relative upside to the shares in the near term, particularly if estimates continue moving lower.”

They added that even an updated sum-of-the-parts (SoTP) analysis of the planned FedEx Freight split next year implies only about 11% upside, with nine months still left before execution.

While the first-quarter EPS estimate for FY26 was nudged up to $3.63 from $3.60, Evercore cut projections for subsequent quarters more sharply.

The second quarter forecast dropped to $3.89 from $4.50, and the fourth quarter to $6.13 from $6.73, with only a marginal change to the third quarter at $4.34.

“We are lowering future period EPS estimates meaningfully on a more modest parcel industry demand outlook (including changes in de minimis rules) and as important macro indicators slow meaningfully,” the analysts led by Jonathan Chappell wrote.

The team flagged additional risks, including the global removal of de minimis import exemptions effective August 29 and persistent volume challenges at FedEx Freight.

Evercore acknowledged FedEx’s efforts under its Network 2.0 restructuring and prior success with the DRIVE program, but warned that cost efficiencies are likely back-end loaded and insufficient to offset near-term headwinds.

With retail sales growth decelerating and industrial production weakening, analysts said they “no longer believe productivity enhancements alone are enough to fully reverse macro headwinds.”