FedEx withdrew its full-year earnings guidance late Thursday, after disclosing a surprise earnings decline for its fiscal first quarter. FedEx stock sank to a two-year-plus low Friday amid a flurry of price-target cuts.
Big FedEx Earnings Miss
Late Thursday, FedEx's preliminary results showed that Q1 EPS fell 21% vs. a year earlier to $3.44, far below views for an 18% gain. Revenue rose more than 5% to $23.2 billion, but also missed estimates.
The company pulled its fiscal 2023 forecast citing the preliminary Q1 results and expectations for continued volatility in the operating environment. It also expects further weakness in the current Q2.
"Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the U.S.," FedEx CEO Raj Subramaniam said in Thursday's release.
"We are aggressively accelerating cost reduction efforts," he added. FedEx will shutter 90 offices, defer hiring and park planes, the release said.
It added: "FedEx Express results were particularly impacted by macroeconomic weakness in Asia and service challenges in Europe, leading to a revenue shortfall in this segment of approximately $500 million relative to company forecasts. FedEx Ground revenue was approximately $300 million below company forecasts."
The company said it "plans to provide additional details on its cost initiatives and updated outlook during its upcoming earnings call," set for Sept. 22 after the market close.
FDX Stock Sinks: 'Ugly Quarter And Outlook'
FedEx stock plunged 21.3% to 161.04 in huge volume on the stock market today. Shares hit their lowest level since July 2020. UPS shed 4.7% Friday and XPO Logisitics lost 4.7%.
Late Thursday, Baird analyst Garrett Holland said the Q1 preannouncement marked an "ugly quarter and outlook." But he maintained an outperform rating on FDX stock, while slashing his price target to $240 from $300.
"The next few quarters will be tough, but depressed valuation increasingly offers free optionality on improving performance and a cyclical recovery," Holland added. Ten more analysts cut price targets on FedEx stock Friday, FactSet shows.
