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FedEx at risk: low demand and economic uncertainty weigh on the company

Posted on: Apr 03 2025

The Q3 fiscal year 2025 report fell short of expectations, leading to a downward adjustment of the fiscal year 2025 outlook. FedEx stock is falling.

The FedEx Q3 fiscal 2025 earnings report revealed weaker-than-expected results. The company attributed this to a decline in transportation volumes and economic uncertainty despite its cost-cutting efforts through the DRIVE program. Investors reacted negatively to the report, pushing FedEx stock lower amid concerns about the company’s ability to return to growth in the short term.

This article examines FedEx Corporation, outlines its revenue streams, reviews the Q2 fiscal year 2025 performance, and analyses expectations for fiscal year 2025. In addition, it provides a technical analysis of FDX stock, forming the basis for the FedEx stock forecast for 2025.

About FedEx Corporation

FedEx Corporation is an American logistics company founded in 1971 by Frederick Smith. The company provides global express delivery, freight transportation, logistics, and e-commerce services. In 1978, it went public through an IPO on the NYSE, where its stock trades under the ticker FDX.

FedEx holds a leading position in the global logistics and delivery market, though its market share varies by region and delivery segment. Major competitors include Amazon Logistics, DHL, and United Parcel Service, Inc. (NYSE: UPS).

FedEx Corporation’s business model

FedEx’s business model is centred around providing logistics and transportation services, primarily express delivery and freight transportation. The company generates revenue from various business segments, each catering to different client categories: individuals, small and medium-sized enterprises, and large corporations. The main sources of the company’s income are as follows:

  • FedEx Express: one of the key segments responsible for the fast delivery of parcels and documents worldwide. Revenue is generated through tariffs based on weight, distance, and delivery speed
  • FedEx Ground: ground delivery of freight and parcels, which is typically slower but more cost-effective than air transportation. This segment is popular among small and medium-sized enterprises, as well as in the e-commerce sector
  • FedEx Freight: this segment transports freight across the US and international routes, focusing on large and heavy cargo.
  • FedEx Services: provides logistics and business solutions, including supply chain management, IT services, and e-commerce support for corporations
  • FedEx Office: offers retail and business services, including document printing, mailbox rentals, and package handling and shipping at service points

The company reports on two segments – FedEx Express and FedEx Freight – with other divisions categorised under ‘Other Income’.

FedEx Corporation Q1 FY 2025 report

On 19 September 2024, FedEx posted disappointing results for the Q1 fiscal year 2025, which ended on 31 August 2024. Below are the key figures compared to last year’s corresponding period:

  • Revenue: 21.60 billion USD (-0.5%)
  • Net income: 890 million USD (-26.0%)
  • Earnings per share: 3.60 USD (-21.0%)
  • Operating margin: 5.60% (-170 basis points)

Revenue by segment:

  • FedEx Express: 18.30 billion USD (-1.0%)
  • FedEx Freight: 2.32 billion USD (-2.0%)
  • Other and eliminations: 945 million USD (+9.0%)

A fundamental analysis of FedEx’s report shows no revenue growth amid rising expenses. Transportation costs rose by 5% to 5.27 billion USD, and business optimisation costs increased by 22% to 128 million USD. As a result, net income declined from 1.16 billion to 0.89 billion USD. Analysts’ forecasts were not met: revenue was expected to be 360 million USD higher (21.96 billion USD), and earnings per share were projected at 4.86 USD, above the actual 3.60 USD. Following the report’s release, FedEx stock plunged by over 15%.

If the logistics company shows no revenue growth, this may indicate a slowdown in the US economy. Additional pressure came from a 0.50% Federal Reserve interest rate cut, which may suggest the peak of economic growth.

FedEx’s outlook for the fiscal year 2025 was cautious, with revenue expected to rise moderately and the EPS forecast lowered from 18.25-20.25 USD to 17.90-18.90 USD.

FedEx CEO Rajesh Subramaniam noted that the weak results were due to reduced demand for express deliveries, higher operating costs, and a downturn in industrial production. Despite cautious optimism about the second half of 2024, the company maintained a moderate outlook due to economic uncertainty.

FedEx Corporation Q2 FY 2025 report

On 19 December 2024, FedEx posted disappointing results for the Q2 fiscal year 2025, discouraging investors again. Below are the main highlights:

  • Revenue: 22.00 billion USD (-1.0%)
  • Net income: 0.99 billion USD (-1.9%)
  • Earnings per share: 4.05 USD (+1.5%)
  • Operating margin: 6.30% (-10 basis points)

Revenue by segment:

  • FedEx Express: 18.84 billion USD (+0.3%)
  • FedEx Freight: 2.18 billion USD (-11.2%)
  • Other and eliminations: 949 million USD (+0.9%)

FedEx’s management, commenting on the 1% revenue decline, attributed it to a challenging economic environment, particularly the weakness in the US industrial economy and the expiration of its air freight contract with the US Postal Service (USPS), which ended on 29 September 2024 and had previously generated approximately 2 billion USD in annual revenue. However, there were also positive developments, including a 9% increase in international export parcel volume and cost-saving benefits from the DRIVE program, which resulted in savings of 540 million USD in the last quarter.

The company also highlighted the completion of a one billion USD share buyback and announced plans to spin off FedEx Freight into a separate publicly traded company within the next 18 months to increase stockholder value.

For Q3 of the fiscal year 2025, management expects positive effects from increased DRIVE savings and higher revenue due to the Cyber Week event dedicated to cybersecurity, digital technology, and the IT industry. However, these benefits may be offset by the loss of the USPS contract.

The fiscal 2025 outlook expects revenue to remain approximately the same as last year. The EPS forecast has been adjusted to a range between 19.00 USD and 20.00 USD, down from 20.00 USD to 21.00 USD.

FedEx Corporation Q3 FY 2025 report

On 20 March 2025, FedEx reported disappointing results for Q3 of the fiscal year 2025, discouraging investors again. Below are the key figures:

  • Revenue: 22.20 billion USD (+0.9%)
  • Net income: 1.09 billion USD (+12.3%)
  • Earnings per share: 4.51 USD (+16.8%)
  • Operating margin: 6.80% (+600 basis points)

Revenue by segment:

  • FedEx Express: 19.81 billion USD (+2.7%)
  • FedEx Freight: 2.08 billion USD (+27.2%)
  • Other and eliminations: 890 million USD (+3.3%)

In his commentary on the report, Rajesh Subramaniam highlighted revenue growth in Q3 compared to the corresponding period last year, marking the first such increase in the fiscal year 2025. He emphasised that FedEx improved profitability despite a particularly challenging operating environment, which included a busy festive season and severe weather conditions. Management also highlighted the success of the DRIVE program, which helped save 600 million USD in costs for the quarter, contributing to a 12% increase in adjusted operating income, which rose to 1.8 billion USD from the previous year.

FedEx’s management expressed cautious optimism for its Q4 fiscal year 2025 outlook. The company is expected to continue its revenue quality strategy and further increase cost reductions from the DRIVE program. Specifically, the company projects ending Q4 of the fiscal year 2025 with annual cost reductions exceeding 2.2 billion USD, aligning with its target for the full fiscal year 2025.

However, management also expects challenges in the FedEx Freight segment to persist, though these should ease somewhat compared to previous quarters. Revenue in the FedEx Express segment is forecast to remain nearly unchanged, while the FedEx Freight segment is projected to see a decline in revenue compared to last year.

FedEx revised its full fiscal year 2025 forecast downward, expecting EPS to range from 18.00 USD to 18.60 USD, down from 19.00-20.00 USD. This reflects ongoing economic challenges and uncertainty regarding global trade policies under the Donald Trump administration.

Expert forecasts for FedEx Corporation

Текст 4

  • Barchart: 18 out of 29 analysts rated FedEx stock as a Strong Buy, one as a Moderate Buy, eight as a Hold, and two as a Strong Sell. The high price target is 370 USD, while the low one is 200 USD
  • MarketBeat: 18 out of 28 specialists assigned a Buy rating to the shares, while eight gave a Hold recommendation, and two rated it as a Sell. The high price target is 354 USD, while the low one is 200 USD
  • TipRanks: 13 out of 19 respondents gave a Buy rating to the stock, four recommended it as a Hold, and two rated it as a Sell. The high price target is 365 USD, while the low one is 200 USD
  • Stock Analysis: out of 24 experts, eight rated the shares as a Strong Buy, seven as a Buy, six as a Hold, two as a Sell, and one as a Strong Sell. The high price target is 354 USD, while the low one is 200 USD

FedEx Corporation stock price forecast for 2025

In May 2021, FedEx stock reached a high of 297 USD before dropping to 140 USD. In 2024, the shares revisited the 297 USD resistance level and made three unsuccessful attempts to break above it. As a result, the stock price again dropped, reaching 220 USD. Based on FedEx’s stock performance, potential price movements in 2025 are as follows:

The primary FedEx stock forecast suggests a breakout above the 250 USD resistance level, followed by an increase to 297 USD. This time, the price may surpass the resistance level and continue its upward momentum. The average price forecast of experts, at 360 USD, serves as an upside target.

The alternative FedEx stock forecast anticipates a breakout below the 220 USD support level, followed by a decline to 185 USD. If this scenario materialises, it will signal ongoing challenges for the company that it may not be able to solve quickly.

FedEx Corporation stock analysis and forecast for 2025

Risks of investing in FedEx Corp stock

When investing in FedEx, it is essential to consider the risks the company may face. Below are the key factors that could negatively impact FedEx’s revenue:

  • Economic sensitivity: FedEx’s financial performance is closely tied to the global economy. Economic downturns may lead to reduced demand for shipping services as businesses and consumers cut back on spending
  • Intense competition: the logistics sector is highly competitive. FedEx faces significant pressure from major players such as UPS (NYSE: UPS) and DHL, as well as emerging competitors like Amazon (NASDAQ: AMZN), which is developing its own logistics network
  • Fuel price volatility: as a logistics company, FedEx is heavily dependent on fuel prices. While fuel surcharges help offset costs, continuous price increases can raise shipment costs and lead to customer dissatisfaction due to higher tariffs, ultimately impacting revenue
  • Dependence on the US market: a substantial portion of FedEx’s revenue is derived from the US. Economic challenges or market saturation within the US may limit growth opportunities and reduce overall revenue

Summary

FedEx’s Q3 fiscal year 2025 results reflect a company navigating a challenging environment, balancing operational improvements with persisting economic challenges. While FedEx has made progress in cutting costs and improving efficiency, the overall downturn in the manufacturing industry and ongoing uncertainty around demand continue to place significant pressure on the company, forcing it to lower its fiscal 2025 outlook.

Nevertheless, there is potential for growth. FedEx has a solid foundation – the DRIVE program, which helps eliminate inefficiencies – and its strong e-commerce position provides a key advantage in a world where online shopping shows no signs of slowing down. If FedEx can perfect its operational improvements, capitalise on digital delivery trends, and experience some relief from macroeconomic uncertainty, it may resume growth by late 2025 or early fiscal 2026.
Liberation Day: President Trump vs. History

Posted on: Apr 02 2025

Liberation Day: President Trump vs. History President Trump has declared April 2 to be Liberation Day. However, historically it has had a different meaning. So...
Can fresh JPY surge hold through Wednesday, Trump’s Liberation Day?

Posted on: Apr 01 2025

JPY rises to the top again as risk-off drives a new plunge in global bond yields ahead of Trump’s next big tariff blast.

Friday saw a vicious resumption of the risk-off move in equity markets, timing-wise associated with the release of the PCE inflation data, which saw year-on-year core inflation rising at 2.8%, slightly higher than the 2.7% expected, though this measure of inflation has been rangebound between 2.6 and 2.9% since last April. It is more likely that equity markets are moving south on a secular unwinding of the “US exceptionalism” trade and concerns that the ongoing Trump tariff blitz – one that changes seemingly by the hour, will send the US economy into a recession. It is a bit ironic that US treasury yields dropped sharply all along the yield curve in the wake of the hot inflation print.

Then we get the news late yesterday from the Wall Street Journal (paywall) that Trump may prefer to go with his original broader and higher tariff strategy after all. Since the election, fears of a massive tariff blitz have occasionally been allayed, particularly last week, by hints that Trump's team might adopt a more nuanced, case-by-case approach to imposing reciprocal tariffs. The only thing the market wants to do with all of this incoming chaos is to seek safe havens, chiefly in gold of late, but even US treasuries are finding safe haven appeal, as is the Japanese yen, which continues to respond to shifts in US yields. Other currencies are a mixed bag, with all pro-cyclical currencies on the defensive since Friday (even the mighty SEK of late), while the US dollar is not showing consistent correlation with risk sentiment. As we discuss below, the tariffs may be mostly important in terms of how they impact the outlook for US economy as well as driving this global portfolio re-allocation theme that reduces exposure to the US (and hence the USD), rather than whether they are driving any challenge to the access to US dollars (the traditional angle for USD outperformance in times of market stress).

Chart: USDJPY USDJPY has backed off sharply from the 151.21 high from Friday and traded well south of 149.00 on the lows this morning before a sharp rebound intraday. The pair seems to trade passively with the direction in US treasury yields, so we may need for a US recession to continue to crystallize in coming months to work down to 140.00 and beyond. To work lower than that in USDJPY, we may need to get a sense that Trump is willing to ease up on the tariff front on countries who are willing to accommodate the new US stance on trade without retaliation, including committing to inbound investment into the US and perhaps a commitment to strengthen the currency. Since last Thursday, the JPY is underperforming relative to the move in US long treasury yields – let’s get over the end-of-financial-year in Japan today to see if this is something we need to investigate further.

Source: Saxo

The week ahead

Australia’s RBA up tonight A minority of observers are looking for the Reserve Bank to cut rates again tonight. The bank would probably do well to cut again now rather than waiting until May to cut, as most expect. Will RBA focus on the March Melbourne inflation gauge rebound or find support for a cut from the steady drop in core inflation through the official Feb “trimmed mean” data series and perhaps at the sense of impending doom from global market sentiment? No idea, but a cut wouldn’t be a huge surprise. AUD has been suffering from weak risk sentiment, not buoyed by Chinese stimulus hopes this time around because these are focused on encouraging consumption, not the fixed asset stimulus that drove so much demand for Australian coking coal, iron ore, etc.

Tuesday: Eurozone Flash March CPI The core, YoY release expected to drop to a new cycle low of 2.5% after 2.6% in February.

Wednesday: Trump Tariff announcements, or “Liberation Day”. The chief question for Trump’s touted Liberation Day may be more in how much the market has front-run whatever bad news is set to be delivered and whether this proves a “sell the rumor, buy the fact” moment or if it even serves as a major event risk at all. After all, the tariff chaos has been rolling along nearly every day since well before Trump’s inauguration and the impacts of tariffs will take a long time to accumulate, as trading partners also roll out their responses to US measures. And eventually, the US Congress could challenge some of the tariffs as discussed in the WSJ article noted above. In short, market focus could be more intense on the incoming data and where we are with the risk of a recession more than tariff headlines in coming weeks. One critical risk from here and over the next few months is the risk of a post tariff “cliff” if it proves that many have been front-running tariffs with large inventory builds ahead of their implementation.

US economic data through Friday’s jobs report The usual first week of the month data is up this week, starting with the JOLTS survey and ISM Manufacturing survey on Tuesday. The JOLTS survey often gets a reaction, though the data quality on the initial release is considered very poor due to the combination of a small sample size and falling response rates (31% in 2023 vs. 64% in 2017. On the ISM Manufacturing, it is far too early in the game to look for tariffs to boost the US manufacturing sector, and this survey gets little play, but did just crawl above the 50 level the last two months after an incredible run of 26 months below 50 (pandemic hangover in part).  The ISM Services survey could get more play on Thursday if it surprises in either direction. But the most important data points will be the labor market data this week, starting with Wednesday’s ADP employment change (especially if it is low again after the +77k in Feb.) and followed by Thursday’s weekly claims numbers if these surprise, and finally the usual monthly jobs report for March on Friday.

Friday: Canada’s March Jobs Report Too early now, but watching for signs of disruption to the Canadian economy from Trump’s tariffs.

FX Board of G10 and CNH trend evolution and strength. Note: If unfamiliar with the FX board, please see a video tutorial for understanding and using the FX Board.

The JPY has jumped to life again on the plunge in global bond yields – though at this point it is merely bouncing back from weakness, not yet trending stronger. Elsewhere, gold really sticks out again after the brutal run higher in the last few sessions, while SEK and NOK maintain incredibly strong readings, even if the momentum has to come off at some point soon.

Source: Bloomberg and Saxo Group

Table: NEW FX Board Trend Scoreboard for individual pairs.

AUDUSD has flipped back to negative as of yesterday’s close, and USDCNH has flipped to positive (although most likely with a very low ceiling at 7.375 for now). AUDNZD is in a pivotal area around 1.1000 after the downtrend of late has failed to become more entrenched. The CADJPY reading just managed to flip to positive late last week and could tilt back into negative on today’s close already.

Source: Bloomberg and Saxo Group
John J. HardyGlobal Head of Macro StrategySaxo Bank
Topics: Forex Highlighted articles Trump Version 2 - Traders FR US Actualites et Analyses EURUSD USDJPY
What’s Happening to GOOGL Stock?

Posted on: Mar 30 2025

Alphabet stock has solid growth expectations and a strong moat. So why is the stock down so much this year? The Daily Breakdown dives in. Friday’s TLDR GOOG stock has tumbled The fundamentals are clear But what about the risks? Deep Dive Let’s call it what it is: It’s been a tough stretch for the…

The post What’s Happening to GOOGL Stock? appeared first on eToro.
What is the end game on auto tariffs?

Posted on: Mar 29 2025

 From the man on the street on Trump’s auto tariffs What is the end game on auto tariffs? Looking at President Trump’s auto tariffs I...
Pfizer Wave Analysis – 27 March 2025

Posted on: Mar 28 2025

Pfizer: ⬇️ Sell – Pfizer broke support level 25.20 – Likely to fall to support level 24.70 Pfizer recently broke the pivotal support level 25.20 (lower border of the sideways price range inside which the price has been moving from November). The.
Australia & UK Inflation Rates Decline Unexpectedly - 26 March 2025

Posted on: Mar 27 2025

Australia’s consumer price index (CPI) eased to 2.4% year-on-year in February. This was a surprise as the market forecast stood at 2.5%, which would have been unchanged from January. UK CPI also came in lower than expected.

UK spring statement 2025: insights for equity investors

Posted on: Mar 26 2025

UK spring statement 2025: insights for equity investors

With Chancellor Rachel Reeves set to deliver the UK’s spring statement on 26 March 2025, equity investors face a pivotal moment. Amid a slowing economy and rising fiscal pressures, the government is expected to pursue consolidation strategies that could ripple across markets. The Office for Budget Responsibility (OBR) is likely to downgrade the UK’s 2025 growth forecast from 2% to around 1%, reflecting ongoing macroeconomic headwinds. This article highlights key policy expectations and outlines actionable strategies for navigating the evolving investment landscape.

Anticipated fiscal measures

The spring statement is expected to introduce a combination of spending cuts and targeted investments aimed at stabilising public finances. Key measures may include:

  • Civil service budget reductions: £1.5 billion in cuts targeting back-office functions such as human resources and communications, with a 10% administrative spending reduction targeted by 2028–29.

  • Departmental spending adjustments: Minor reductions across departments to maintain fiscal discipline while preserving essential services.

  • Welfare reforms: Proposals to reduce welfare spending by £5 billion, potentially through initiatives encouraging workforce participation and reduced benefit reliance.

Rebalance portfolios for fiscal resilience

  • Diversify across resilient sectors: With fiscal tightening expected, investors may consider reducing exposure to domestically reliant sectors and reallocating toward technology, healthcare, and export-oriented industries.

  • Focus on quality and cash flow: Companies with strong balance sheets, consistent cash flow, and operational efficiency may be better positioned to weather economic headwinds.

Anticipate sector-specific impacts

  • Financial services: While changes to Individual Savings Accounts (ISAs) have been ruled out, broader fiscal policies could influence retail investment flows. Asset managers may experience shifting demand across products depending on market sentiment.

  • Consumer discretionary: Reduced government spending and welfare reforms may place downward pressure on household consumption, particularly in non-essential goods and services.

  • Infrastructure and defense: Increased commitments to defense and infrastructure investment could create tailwinds for select firms. Investors may find opportunities in construction, engineering, and defense-related companies.

Track rate trends to manage equity-bond dynamics

  • Monitor monetary policy developments: The Bank of England’s interest rate path remains a critical driver of equity valuations and borrowing conditions. Markets will closely watch the Monetary Policy Committee (MPC) for signals related to inflation and growth.

  • Reassess asset allocation: Shifting rate expectations could influence the relative attractiveness of equities versus fixed income. Investors may consider tactical adjustments to reflect changing rate environments.

Optimise for tax efficiency

  • Maximise ISA allowances: With no changes announced to ISA structures, investors should take full advantage of tax-efficient wrappers to protect capital gains and income.

  • Review pension contributions: Changes to fiscal policy may influence long-term tax planning strategies. Pension contributions remain a key tool for enhancing tax efficiency and building retirement wealth.

Stay abreast of geopolitical developments

  • Trade policy risks: UK exporters could be affected by global trade developments, including potential tariff actions from the United States or disruptions to supply chains.

  • International regulation: Shifts in global regulatory frameworks may impact sector-specific risk and broader investor sentiment. Staying informed can help mitigate exposure to sudden market shifts.

Conclusion

The 2025 spring statement is likely to introduce fiscal measures with wide-ranging implications for UK equity markets. By rebalancing portfolios toward resilient sectors, tracking policy and rate developments, and optimising tax strategies, investors can position effectively for a changing macroeconomic and policy environment.

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Koen HoorelbekeInvestment and Options StrategistSaxo Bank
Topics: Equities Highlighted articles ESMA Products NOT Mentioned Technology
Amazon Wave Analysis – 24 March 2025

Posted on: Mar 25 2025

Amazon: ⬆️ Buy – Amazon reversed from the support zone – Likely to rise to the resistance level 210.00 Amazon recently reversed up from the support zone between the support level 190.00 (former resistance from October), lower daily Bollinger Band.
Forexlive Americas FX news wrap 21 Mar: Trump says there is 'flexibility' on tariffs

Posted on: Mar 22 2025

  • Trump: We can talk about China tariffs
  • Canada January retail sales -0.6% vs -0.4% expected
  • Fed's Williams: Current modestly-restrictive policy is 'entirely appropriate'
  • More from Fed's Williams: We're not in a hurry to make next mon policy move
  • Eurozone March consumer confidence -14.5 vs -13.0 expected
  • Fed's Goolsbee: Business contacts are waiting on capital spending in light of tariffs
  • What FedEx earnings reveal about the state of the economy
  • ECB's Stournaras: All available information points to another rate cut in April
  • Fed's Waller: I preferred to continue current pace of balance sheet runoff
  • King Charles made an offer to Trump to join the Commonwealth, hoping to cool tensions
  • Canada February new housing price index 0.1% versus -0.1% last month
  • Trump unswayed at efforts to craft tariff deal - report
  • Bakers Hughes oil rig count -1 at 486

Markets:

  • WTI crude oil up 20-cents to $68.27
  • US 10-year yields up 1.7 bps to 4.25%
  • Gold down $22 to $3021
  • S&P 500 up 0.1%, Nasdaq up 0.5%
  • USD leads, AUD lags

It was a strange day in markets and I suspect that the quad witching had something to do with it. Equities were beaten up early but came back to life when Trump said there was 'flexibility' on tariffs ahead of April 2 and that he was going to talk with Xi. Prior to that the US dollar was broadly strong but it gave some back afterwards.

Aside from that, it looked like flows were in charge. The euro and pound bottomed out right at the European close in a flurry of USD strength. That partly unwound later but still left the dollar solidly higher on the day in a reversal of the recent trend. The euro touched 1.0798 from a high of 1.0861 in Europe. It bounced from the figure to end at 1.0815.

The Canadian dollar was in focus with retail sales data released. USD/CAD rose after the data as it modestly missed estimates and hit 1.4375 but the advance reading for February sales was better than feared and that move unwound along with the better risk mood and a bounce in oil prices.

Gold hit an air pocket shortly after the US equity open in a quick fall to $3000 from $3035. Bids at the figure held though and that started a slow rebounded to $3023 last.

Overall, it wasn't a big day for news or market moves. The comments from Fed officials highlighted the uncertainty on the outlook and a willingness to wait on economic data. That was totally in-line with what Powell said on Wednesday.

Have a great weekend.

This article was written by Adam Button at www.forexlive.com.