FedEx cuts full-year guidance, sending shares lower in premarket trading via Investing.com

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

For fiscal 2025, the company lowered its outlook for adjusted earnings per share to a range of $20.00 to $21, 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 to earlier forecasts of low-to-mid single-digit percentage growth.

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 that they would work to manage expenses and reiterated their commitment to return $3.8 billion to shareholders during the fiscal year.

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

However, FedEx signaled that it faced a “challenging” first quarter, due in part to higher operating expenses and lower demand for its priority offerings.

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

Federal Express, a key segment that oversees the company’s air-to-ground express network, saw margins slip to 5.2 percent in the first quarter from 7.1 percent a year earlier.

“The unfortunate reality for FedEx is (that it was) one of its worst first-quarter profitability results outside of the 2009 recession,” analysts at Barclays said in a note to clients.

Meanwhile, analysts at Morgan Stanley said FedEx’s reported earnings rate was of such “magnitude” that it “suggests greater (earnings per share) risk” over the longer term than they had imagined previous. Analysts downgraded the stock to “Underweight” from “Equal-weight” and cut their price target to $200 from $215.

(Yasin Ebrahim contributed reporting.)