FedEx lowers business outlook and misses expectations

FedEx disappoints investors with current business performance and less optimistic outlook for the upcoming year.

12/20/2023, 1:02 PM

Eulerpool News Dec 20, 2023, 1:02 PM

Disappointment among investors in pre-market trading on Wednesday at the New York Stock Exchange (NYSE) due to FedEx's business numbers. The stocks of the internationally operating logistics company experienced a significant drop of 9.62 percent to $253.06. Even the announcement of a share repurchase program worth another billion US dollars could not improve the mood at the stock exchange.

FedEx lowers revenue forecast, causing concern for UPS and DHL

Analysts expressed criticism of the profitability of FedEx's express business. Jordan Alliger of Goldman Sachs particularly criticized the results in this area of the logistics company. JPMorgan also expressed concerns about the weak performance in the second quarter and the outlook for FedEx. Expert Brian Ossenbeck expects expectations for the current third quarter to now decrease. In addition, the business figures primarily indicated a worse situation for UPS, as FedEx referred to a decrease in demand in the domestic express business and in the international freight sector.

While analyst Thomas Wadewitz from UBS had expected a positive surprise from FedEx in the second quarter, the market is now disappointed. However, as Wadewitz emphasizes, the planned cost reductions by the logistics company could potentially serve as support for the stock price in the future.

The announcement by FedEx and the release of their business report also had an impact on the competition. Thomas Wadewitz from UBS sees particularly strong effects on UPS' international activities. However, analysts from Goldman Sachs emphasized that the results of FedEx could also be interpreted negatively for other companies in the industry, which could lead to UPS exercising caution in future forecasts.

Consequently, the plan of FedEx to repurchase its own shares is not a strategy to improve the market situation, as emphasized by the expert from Goldman Sachs. Rather, the negative influence on the stock price of the logistics company indicates that a more difficult path lies ahead to improve business numbers and meet investor expectations.

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