FedEx Stock Tanks Amid ‘Challenging’ Demand Environment

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

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

CFO Says ‘Soft Revenue Trends’ Affected Results

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

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 sees revenue growth to be in a low-single-digit percentage, down from its earlier forecast of a low- to mid-single-digit percentage.

Jefferies Lowers Price Target

Following the report, Jefferies reduced its price target to $275 from $300. The analysts argued that with the current quarter expected to be pressured and its first-half EPS estimates down 20%, “we do not think the company can achieve 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% above where they began the year.