First Published: 8:19 PM EST
FedEx (NYSE: FDX) stock plummeted after the market closed Thursday as the global transportation company posted early results for Q1 2023.
FedEx expects adjusted earnings for FY23 to come in at $3.44 per share, while analysts are looking for EPS of $5.15. Revenue in FY23 is projected to be $23.2 billion vs. analysts’ estimate of $23.5 billion.
The transportation conglomerate added that its Q1 results were “adversely impacted by global volume softness that accelerated in the final weeks of the quarter.”
The company’s FedEx Express business results were “particularly impacted by macroeconomic weakness in Asia and service challenges in Europe” and this business is expected to fall short of revenues by around $500 million in Q1, below the company’s forecasts.
Meanwhile, FedEx Ground revenues are anticipated to fall short by $300 million versus the company’s earlier outlook.
Raj Subramaniam, FedEx Corp. President, and CEO commented that volumes have declined globally due to macroeconomic headwinds and Q1 results are disappointing.
But Subramaniam added that “…we are aggressively accelerating cost reduction efforts and evaluating additional measures to enhance productivity, reduce variable costs, and implement structural cost-reduction initiatives. These efforts are aligned with the strategy we outlined in June, and I remain confident in achieving our fiscal year 2025 financial targets.”
The company is withdrawing its earlier forecast for the fiscal year 2023 because of macroeconomic uncertainties.
Revised Outlook for Q2
FedEx expects the macroeconomic volatility to continue for the rest of the year and now expects Q2 revenues ranging between $23.5 billion and $24 billion and earnings to come in at $2.65 per share or more than that.
FDX has now forecasted capex spend of $6.3 billion versus its earlier forecast of $6.8 billion. In FY23, FedEx will buy back $1.5 billion worth of common stock.
Is FedEx Stock a Buy or Sell?
Analysts remain cautiously optimistic about FDX with a Moderate Buy consensus rating based on 13 Buys and eight Holds.
FDX’s average price forecast of $278.33 implies that the stock has an upside potential of around 35.8%.
