TLDR
- FedEx stock surged 5.4% in premarket trading after reporting Q1 earnings of $3.83 per share, beating estimates of $3.60
- Strong domestic delivery demand helped offset 3% decline in international exports due to trade policy changes
- Cost-cutting initiatives including facility closures and aircraft parking contributed to 2.2% profit growth
- Multiple analysts raised price targets, with TD Cowen increasing target to $271 from $269
- Company provided fiscal 2026 guidance below some Wall Street expectations but maintains June 2026 Freight spinoff timeline
FedEx stock climbed 5.4% in premarket trading Friday following better-than-expected first quarter results for fiscal 2025. The shipping company delivered earnings per share of $3.83, surpassing analyst estimates of $3.60.
The logistics giant reported a 2.2% increase in adjusted profit compared to the same quarter last year. Strong summer holiday demand drove domestic parcel volumes higher during the reporting period.
Overall average daily volumes increased 4% in the quarter. This growth came despite a 3% decline in international exports. Trade policy headwinds, including the end of duty-free exemptions for shipments under $800, pressured cross-border volumes.
Revenue per package climbed 2% during the quarter. This pricing improvement helped offset some volume challenges in international markets. The company generated $88.59 billion in total revenue for the period.
Cost-Cutting Drives Performance
FedEx’s operational efficiency measures played a key role in the earnings beat. The company has implemented various cost-reduction strategies including parking aircraft and closing facilities.
Management continues pursuing billions of dollars in cost savings through these programs. The initiatives include merging business units and tightening operational controls across the network.
The company ended its partnership with the U.S. Postal Service last year. This move eliminated a contract that had consistently weighed on earnings with high costs and thin margins.
Analyst Updates and Market Response
TD Cowen raised its FedEx price target to $271 from $269 while maintaining a Buy rating. The firm noted the company’s ability to exceed expectations despite trade challenges.
Several other analysts updated their outlooks following the earnings release. UBS increased its price target to $314 from $293. Jefferies raised its target to $280, describing results as “better than feared.”
Wells Fargo set a $250 price target, calling the guidance “better than expected.” BofA Securities lifted its target to $244, highlighting the strong earnings performance.
The Freight segment missed analyst expectations by a wide margin as industrial headwinds persist. Despite this challenge, management remains committed to spinning off the Freight division in June 2026.
Looking Ahead
FedEx provided fiscal 2026 guidance that came in below some Wall Street estimates. The company expects approximately 5% revenue growth at the midpoint of its forecast range.
FedEx currently trades at 11.83 times projected forward earnings. Competitor UPS shares also gained nearly 2% in premarket trading, reflecting positive sentiment across the logistics sector.
The company maintains its timeline for the planned Freight division spinoff scheduled for June 2026.
