FedEx Results Benefited From Cost Savings, But Macro Remains Key Stock Driver, UBS Says

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FedEx Results Benefited From Cost Savings, But Macro Remains Key Stock Driver, UBS Says

, MT Newswires - 2:56 PM ET 3/21/2025 default

02:56 PM EDT, 03/21/2025 (MT Newswires) -- FedEx ( FDX )' (FDX) fiscal third-quarter results benefited from cost savings, but macro dynamics will likely dictate the future direction of its share price, UBS Securities said in a note.

The parcel delivery company late Thursday lowered its fiscal 2025 outlook as third-quarter earnings growth fell short of Wall Street's expectations. Chief Executive Rajesh Subramaniam said on a conference call that the most-recent period saw $600 million of savings, though weakness in the industrial economy impacted its business-to-business volumes, according to a FactSet transcript.

FedEx ( FDX ) now expects full-year adjusted per-share earnings between $18 and $18.60, down from its previous outlook of $19 to $20. The consensus on FactSet is for non-GAAP EPS of $18.40. FedEx ( FDX ) guided for flat to slightly lower full-year revenue versus its prior forecast of flat sales. Analysts are looking for $87.53 billion, down from the prior year's topline of $87.7 billion.

Continued weakness and uncertainty around the US industrial economy drove the revised earnings outlook, FedEx ( FDX ) Chief Financial Officer John Dietrich said in a statement late Thursday.

"We believe (FedEx ( FDX )) is continuing to deliver solid cost performance and pricing is improving, but macro/freight demand remain an important driver for the stock," a group of UBS analysts, including Thomas Wadewitz, wrote. "We believe that cost takeouts realized within the DRIVE program should continue to be an important driver of earnings and margin improvement in (2025)."

FedEx ( FDX ) shares fell 6.3% in late Friday afternoon trade. UBS lowered its price target on the stock to $331 from $350, while reiterating its buy recommendation.

FedEx ( FDX )' adjusted earnings rose to $4.51 per share for the quarter ended Feb. 28 from $3.86 a year earlier, but trailed the $4.56 consensus. Revenue increased to $22.2 billion from $21.7 billion, above the Street's $21.88 billion estimate.

The parcel pricing environment is gradually improving, UBS' Wadewitz said.

Price: 229.55, Change: -16.66, Percent Change: -6.76

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