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Investing.com - BofA Securities lowered its price target on FedEx (NYSE:FDX) to $245.00 from $270.00 on Wednesday while maintaining a Buy rating, citing concerns about the company’s cautious first-quarter outlook.
FedEx shares fell 6% in after-hours trading after the company provided first-quarter adjusted earnings guidance of $3.40-$4.00 per share, below analyst expectations of approximately $4.03. The guidance implies a year-over-year earnings change ranging from a 6% decline to an 11% increase.
The shipping giant refrained from providing a full-year earnings outlook for fiscal 2026, marking the first time since 2020 that the company has withheld annual guidance. FedEx cited uncertainty regarding trade policy and macroeconomic developments as reasons for the limited forecast.
FedEx expects first-quarter revenue to be flat to up 2% year-over-year, with growth at Federal Express Corp and a slight decline at FedEx Freight. The company anticipates a $170 million year-over-year headwind from international export pressure related to global trade policy impacts, and a $120 million headwind from the USPS contract expiration, partially offset by $200 million in transformation savings.
The company targets $1 billion in permanent cost reductions in fiscal 2026 from its DRIVE and Network 2.0 transformation programs, following $4.0 billion in savings achieved in fiscal 2024 and 2025. FedEx’s CFO noted the company’s ability to quickly reduce Asia-U.S. capacity amid trade policy pressure, having cut capacity by 35% in the first week of May.
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