FedEx Struggles Amid Market Rally: A Look at Recent Performance
Memphis-based Company Faces Challenges Despite Growth Potential
FedEx Corporation (FDX), headquartered in Memphis, Tennessee, specializes in transportation, e-commerce, and business services. The company holds a market cap of $73.3 billion and offers a range of services including global express and freight delivery, ground parcel services, customs brokerage, supply chain management, and e-commerce solutions.
Over the past year, FedEx’s shares have lagged behind the overall market. While FDX saw a gain of 17.6%, the S&P 500 Index ($SPX) surged nearly 32.1%. Year-to-date in 2024, FDX’s stock climbed by 19.8%, though this still contrasts with the SPX’s increase of 26.2%.
When compared to the Pacer Industrials and Logistics ETF (SHPP), FedEx’s performance is more favorable. The ETF has grown approximately 10.1% over the last year, while FDX has outperformed it with a year-to-date gain of 19.8% versus SHPP’s 3.6% return.
Several factors contribute to FedEx’s recent struggles. A decline in package volume compared to last year, combined with a customer shift toward cheaper deferred services, has lowered demand for premium offerings. Additionally, rising wages and transportation rates have also posed challenges for the company.
On September 19, FedEx reported its Q1 results, with revenue recorded at $21.6 billion, a slight year-over-year decrease. The adjusted earnings per share (EPS) of $3.60 fell short of consensus estimates by 25.3%.
Looking ahead to the current fiscal year, which concludes in May 2025, analysts project a 10.1% growth in FedEx’s EPS, reaching $19.59 on a diluted basis. The company’s history of meeting earnings forecasts has been mixed; it surpassed expectations in two of the last four quarters while falling short in the other two.
Among the 27 analysts observing FedEx stock, the collective rating stands at “Moderate Buy.” This is comprised of 17 “Strong Buy” ratings, one “Moderate Buy,” seven “Holds,” and two “Strong Sells.”
This outlook has shifted positively in the last two months, as 16 analysts now recommend a “Strong Buy.”
On November 26, Barclays PLC (BCS) analyst Brandon Oglenski reaffirmed a “Buy” recommendation for FedEx with a price target set at $365, indicating a potential upside of 20.5% from current valuations.
The average price target of $313.30 suggests a modest 3.4% increase from FedEx’s current price levels.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
