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What you need to know
- FedEx will report its second quarter earnings at the end of Thursday’s bell.
- Analysts have been largely positive about the stock and expect another quarter of revenue to be down before the shipping giant is back on track.
- FedEx has said it plans to complete a review of options for its freight business by the end of the calendar year, as analysts have said it may "unlock value" for the business to be spun off.
FedEx’s (FDX), which is expected to announce its earnings for the fiscal second quarter after Thursday’s market closure, will likely show a slight decline in revenues before FedEx begins to grow again.
Analysts are largely bullish on FedEx's stock, with 11 of the 15 analysts who follow FedEx and are tracked by Visible Alpha rating it as a "buy," along with three "hold" ratings and one "sell." Their average price target of about $308 would imply roughly 9% upside from Friday's closing price of $283.42. This stock is up about 12% since 2024.
FedEx will report a second-quarter sales of $22.14 Billion, a slight decrease from the $22.17 Billion reported last year. The shipping company’s net income is projected to increase by nearly 3% over the past year to $925.1 million, as it has cut its costs.
Visible Alpha estimates suggest that FedEx’s revenue could grow year over year in the following quarters.
'One of the Most Consequential Quarters in Years'
FedEx, as part of the restructuring announced in 2013, said that FedEx Ground, Services, and Express would be brought under one corporate umbrella, whereas FedEx Freight was kept separate.
Once the restructuring was completed, FedEx said in its fourth-quarter report in June that it was "conducting an assessment of the role of FedEx Freight and our portfolio structure," with the review expected to be done by the end of 2024, according to a transcript provided by AlphaSense.
Citi analysts wrote Friday that the coming earnings report "could be one of the most consequential quarters in years" for FedEx, and suggested spinning off the Freight business into a standalone company could "unlock value," but may not be the best option for the long term.
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