Stock Analysis & Ideas

FedEx (NYSE: FDX): Q1 Results Coming up Tomorrow

Story Highlights

Global transportation company FedEx is scheduled to release its first quarter Fiscal 2023 results tomorrow after the market closes.

The wall street community is all eyes on the upcoming FedEx (NYSE: FDX) results releasing tomorrow. While a lot of bad news has been disclosed by the company in its preliminary results at the end of last week, investors will seek more details on the long-term scenario.

Based in the U.S., FedEx Corp. is a multinational delivery services company that provides transportation, e-commerce, and business services worldwide.

Why is FedEx Stock Falling?

The stock plummeted over 20% on September 16 after the company announced dismal preliminary Q1 results based on muted demand in global shipments, weakness in Asia and Europe, as well as high operating expenses.

For the fiscal first quarter, the company expects adjusted earnings of $3.44 per share, while analysts are forecasting EPS of $5.15. The expected EPS is also lower than its comparative prior-year period’s EPS of $4.37 per share.

Further, revenues are expected to be $23.2 billion, lower than the street’s expectations of $23.5 billion.

Based on the uncertain macro backdrop, the company withdrew its full-year FY2023 outlook. For the upcoming second quarter, the company now forecasts adjusted EPS of at least $2.75 (consensus: $5.46) while revenues are expected to range between $23.5 billion to $24 billion (consensus: $24.87 billion).

The company stated that it would undergo significant cost-cutting measures. It plans to shut down 90 offices and five corporate office facilities, stop new hiring, reduce flight frequencies, and cancel projects.

In addition, the company slashed its capital expenditure expectations for the year by $500 million to $6.3 billion.

On a positive note, however, the company will continue to repurchase stock worth $1.5 billion during FY2023. Out of that, $1 billion is expected to be bought back in the second quarter.

Wall Street’s Take on FedEx

As per TipRanks, analysts are cautiously optimistic about the stock and have a Moderate Buy consensus rating, which is based on 11 Buys and 11 Holds. FedEx average price forecast of $231.70 implies 47.20% upside potential.

Following the disappointing preliminary Q1 results announcement last week, FedEx stock saw several downward revisions in price targets as well as rating downgrades.

KeyBanc analyst Todd Fowler suspended his price target of $325 and downgraded the stock to Hold from Buy. Stifel analyst J. Bruce Chan also downgraded shares to Hold from Buy while chopping the price target to $195 (23.89% upside potential) from $288 earlier.

Yesterday, Berenberg Bank analyst William Fitzalan slashed the price target on FedEx to $200 (from $275) and reiterated a Hold rating.

Ending Thoughts

Having lost almost 23% of its market capitalization in the last five trading days, FedEx stock looks relatively cheaper.

While FedEx stock may look attractive to investors looking to take a position, they must look out for more details at the earnings call scheduled for tomorrow before making any investment decisions.

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