FedEx has become a “show-me story,” said one analyst, and believes the “the good news” was that the company provided some specifics on the timing of a cost-cutting and rate-raising plan, and expressed “urgency” regarding its implementation.
Shares of FedEx Corp. fell Friday, as the package delivery giant’s warning of a disappointing earnings report didn’t go far enough, but some analysts found reason to be optimistic.
The stock FDX, -3.30% sank 2.6% in morning trading Friday, toward the lowest close since June 2020. It has plummeted 26.5% since FedEx issued its profit warning after the Sept. 15 close, highlighted by the record 21.4% plunge on Sept. 16. That compares with a 10.7% drop in the Dow Jones Transportation Average DJT, -2.63% since Sept. 15, and a 1,324-point, or 4.3% selloff in the Dow Jones Industrial Average DJIA, -1.87%.
“FDX is a show-me story stock at this point, a label that is not conducive to broader market skittishness, and proof of execution is required before there is a greater willingness to provide support, even at depressed valuation levels,” Chappell wrote in a note to clients. “That said, the obvious miss-and-lower catalyst is done, management is taking aggressive actions to stem the margin bleed,” and the relative underperformance has already been “immense” in the past month.
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FedEx plans up to $2.7 billion in cost cuts, higher shipping rates as demand weakensFedEx on Thursday announced between $2.2 billion and $2.7 billion in cost savings for the fiscal year ahead and said it would raise shipping rates for air and ground services in January.
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FedEx Hikes Package Rates, Details Cost Cutting as Demand Weakens GloballyFedEx announced rate hikes and detailed its cost-cutting efforts after warning last week it was seeing demand weaken globally.
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FedEx grilled on cost-cut plan after profits slideFedEx Corp outlined cost cuts of up to $2.7 billion after falling demand hammered first-quarter profits, but analysts grilled company executives with questions in an earnings call about whether steps such as parking planes and shuttering some offices were too little too late.
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FedEx hikes package rates for 2023FedEx will raise ground and express shipping rates by an average of 6.9% next year, the company said Thursday. Freight rates will increase by an average of 6.9% to 7.9%.
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