FedEx Bets On Cost Cuts To Boost Margins, Says Analyst

Nabaparna Bhattacharya

September 19, 2025

FedEx Corporation (NYSE:FDX) shares surged as the company reported a strong quarterly performance, surpassing revenue and profit expectations.

The company reported adjusted earnings per share of $3.83, beating the consensus estimate of $3.62. In addition, FedEx reported sales of $22.20 billion, beating the consensus estimate of $21.66 billion.

Bank of America analyst Ken Hoexter reiterated the Neutral rating on the stock, raising the price forecast from $240 to $244.

Also Read: These Analysts Revise Their Forecasts On FedEx After Q1 Results

Hoexter said FedEx has historically traded at 12.5x–18.5x earnings, but its current multiple is pressured by macro sensitivity and ongoing volume declines.

He noted that cost reductions should support margins as earnings inflect, while management stays focused on integrating Ground and Express, removing structural costs, and improving returns.

He added that FedEx benefits from cross-border trade growth and generally tracks the broader economy.

The analyst highlighted that FedEx's fiscal 2026 adjusted EPS target of $17.20–$19.00 implies a slight year-over-year decline on 4%–6% revenue growth.

He added that guidance includes a $1 billion operating-income drag from global-trade shifts, including the loss of de minimis, shifting volumes, and $300 million in customs-clearance costs, and a $160 million hit from the USPS contract ending in September, partly offset by $1 billion in transformation savings.

The analyst added that mix pressure persists as weaker Express International is balanced by Domestic share gains, including Amazon (NASDAQ:AMZN) ramps that are profitable but lower-margin.

The analyst raised the fiscal 2026 earnings estimates from $17.75 to $18.00. Hoexter raised the fiscal 2027 earnings estimate from $20.45 to $21.05.

Price Action: FDX shares were trading higher by 2.95% to $233.26 at last check Friday.

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