Logistics giant FedEx (FDX) is scheduled to announce the results for the second quarter of Fiscal 2025 after the market closes on Thursday, December 19. The consensus adjusted EPS (earnings per share) estimate of $4.01 indicates a slight increase from EPS of $3.99 in the prior-year quarter. Further, analysts expect Q2 FY25 revenue to decline modestly year-over-year to $22.16 billion.
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FedEx has been under pressure due to the impact of macro challenges on consumer spending, the shift to cheaper delivery options, and a decline in priority shipments between businesses.
Analysts’ Views Ahead of FDX’s Q2 Earnings
Ahead of FedEx’s Fiscal Q2 earnings, Citi analyst Ariel Rosa slightly lowered the price target on FDX stock to $330 from $331 and reiterated a Buy rating. The analyst thinks that this could be “one of the most consequential quarters in years” for the company, given that management is expected to announce the results of the strategic review of its Freight division.
The analyst noted that the contribution of the Freight segment to FedEx’s combined adjusted operating income has increased to nearly 30% from below 10% several years ago. The segment has helped in supporting the company’s overall earnings, offsetting the weakness in the Express division. Rosa expects the Freight business to be worth $30-35 billion, which represents about 50% of the company’s market cap and ~40% of its enterprise value.
While Rosa understands that FedEx intends to spin off the Freight business to unlock value, he sees major execution risk and is unconvinced that this move is in the best interest of long-term shareholders.
In comparison, JPMorgan analyst Brian Ossenbeck raised the price target on FedEx stock to $366 from $350 and maintained a Buy rating. Heading into the earnings, Ossenbeck has a favorable stance on FDX and placed it on his “Positive Catalyst Watch,” as he sees a high probability of the spin-off of the Freight segment and expects the company to reaffirm its full-year earnings outlook.
Options Traders Anticipate a Major Move in FDX Stock
TipRanks’ Options tool offers a quick way to gauge what options traders anticipate from the stock following its earnings report. The expected earnings move is calculated using the at-the-money straddle of the options set to expire closest to the announcement. While this may sound complex, the tool handles the calculations for you.
Currently, it indicates that options traders are predicting about a 10.1% swing in either direction in FDX stock.
Is FedEx a Buy, Sell, or Hold?
Wall Street is cautiously optimistic on FedEx stock, with a Moderate Buy consensus rating based on 14 Buys, eight Holds, and one Sell recommendation. The average FDX stock price target of $309.95 implies 9.4% upside potential from current levels. Shares have risen 12% year-to-date.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
