FedEx Stock Dropped as Guidance Split Analysts

June 21, 2023 at 16:06 PM EDT

FedEx Stock (NYSE: FDX/quote">NYSE: FDX)

FedEx (NYSE: FDX/quote">NYSE: FDX) shares were trading down on Wednesday after the company said that the midpoint of its outlook range for the entire year would be lower than the consensus estimate. On Wall Street, opinions are mixed on whether the shipper will face more headwinds that will squeeze their margins or if the cost-cutting tale is taking hold.

According to Jonathan Chappell, an analyst with Evercore ISI, the FQ4 EPS beat from the Memphis-based shipping giant was impressive, particularly when considering the ongoing volume/revenue issues across all business lines. He observed that the FedEx cost strategy produces results with each quarter of margin increase despite revenue challenges, providing greater confidence in the shipper’s execution of its plan. On FDX, the investment group maintained its Overweight recommendation.

FedEx continues to demonstrate early success with the expense plan, with Bank of America analyst Ken Hoexter maintaining his optimistic stance on the company. Hoexter noted that FedEx’s profitability rose in the second half of the fiscal year even though the company’s ground volume decreased; this was the first time in the company’s history that this feat was accomplished. FedEx remained BofA’s top recommendation among large-cap transport stocks due to the company’s promising growth prospects.

Ravi Shanker, an analyst at Morgan Stanley, took a more cautious approach to the print and issued a caution that the FY24 estimate had some fractures. According to the most recent information provided by Shanker, “With cost savings looking relatively on track, it will come down to revenues to determine where FY24 finally ends up.”

Josh Arnold, the leader of the Investing Group at Seeking Alpha, warned that the volume forecast for FedEx seems to be poor, which might affect margins and profitability. FedEx stock is now rated with a Sell rating by Arnold.

Even though FedEx stock was down 2.77% at the end of Wednesday’s trade, it’s still up more than 25% year to date.

Featured Image: Unsplash @ Bannon Morrissy

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