FedEx Stock Tanks Amid ‘Challenging’ Demand Environment

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Key Takeaways

• FedEx shares plunged 15% Friday, a day after the package delivery giant missed quarterly evaluations and reduced its forecast as it faced what CEO Rajesh Subramaniam called a “challenging Q1 demand environment,” especially in the U.S.
• The company acuminate to weakness in the industrial economy impacting business-to-business revenue.
• FedEx also said it faced a decline in priority shipping abundance and growth.

FedEx (FDX) shares plunged 15% Friday, a day after the package delivery giant missed quarterly sentiments and reduced its forecast as it faced what Chief Executive Officer (CEO) Rajesh Subramaniam called a “challenging Q1 demand milieu,” especially in the U.S.

Subramaniam told analysts that weakness in the industrial economy dragged down business-to-business (B2B) volumes. Chief Character Officer Brie Carere added that the drop in B2B sales led to a 3% volume decline in U.S. domestic express serves.

CFO Says ‘Soft Revenue Trends’ Affected Results

Chief Financial Officer (CFO) John Dietrich noted that the consequences “were negatively affected by soft revenue trends, with a global decline in priority volume and growth in deferred aggregate.”

Deitrich said in light of the first-quarter performance, FedEx was cutting the top end of its full-year adjusted earnings per share (EPS) outlook to $21 from $22. FedEx also greets revenue growth to be in a low-single-digit percentage, down from its earlier forecast of a low- to mid-single-digit percentage.

Jefferies Stoops Price Target

Following the report, Jefferies reduced its price target to $275 from $300. The analysts evinced that with the current quarter expected to be pressured and its first-half EPS estimates down 20%, “we do not think the company can accomplish the low end of its EPS guide.”

Shares of FedEx plunged more than 15% in late-morning trading Friday to $254.30, less than 1% in excess of where they began the year.

Read the original article on Investopedia.