FedEx cuts full-year guidance, sending shares lower premarket

Investing.com — Shares in FedEx (NYSE:) sank by more than 12% in premarket US trading after the logisitics group cut its full-year guidance and reported fiscal first-quarter earnings that fell well short of Wall Street expectations.

For fiscal 2025, the company narrowed its outlook for adjusted earnings per share to a range of $20.00 to $21.00, down from $20.00 to $22.00 previously. Revenue growth for the year was now expected to come in at a low single-digit percentage year-over-year, compared with the prior forecast of a low-to-mid single digit percentage increase.

FedEx said its revised guidance reflects the effects of “recent pricing actions, which we expect to help offset weaker-than-expected demand trends.” Executives added they will work to manage expenses, and reiterated their committment to return $3.8 billion to stockholders over the fiscal year.

“We are cautiously optimistic about a moderate improvement in the industrial economy in the second half,” said Chief Executive Officer Rajesh Subramaniam in a call with investors.

However, FedEx flagged that it had faced a “challenging” first quarter due in part to elevated operating expenses and a dip in demand for its priority offerings.

In the quarter ended on Aug. 31, FedEx reported adjusted earnings of $3.60 per diluted share on revenue of $21.6 billion. Analysts polled by Capital IQ had anticipated per-share income of $4.86 on revenue of $21.96B.

Federal Express, a key segment overseeing the company’s air-ground fast shipping network, saw margins fall to 5.2% in the first quarter from 7.1% a year earlier.

“[T]he unfortunate reality for FedEx is [that it was] one of the worst first quarter profitability outcomes outside of the 2009 recession,” analysts at Barclays said in a note to clients.

Meanwhile, analysts at Morgan Stanley said the earnings miss reported by FedEx was of such a large “magnitude” that it “suggests greater [earnings per share] risk” over a longer term than they had previously envisioned. The analysts downgraded their rating of the stock to “Underweight” from “Equal-weight” and slashed their price target to $200 from $215.

(Yasin Ebrahim contributed reporting.)