Logistics giant FedEx (FDX:NYSE) is due to report earnings for the third quarter to the end of February on 20 March after the closing bell, and given its status as a bellwether of US and global economic activity investors will be looking for clues as to the strength of consumer and corporate demand.
Analysts at US investment bank JP Morgan expect the ‘persistent uncertainty’ from tariffs will likely push FedEx’s EPS (earnings per share) guidance for the year to May 2025 to the low end of its forecast $19 to $20 range.
However, in contrast, Deutsche Bank analysts are upbeat about the firm's prospects, describing its DRIVE initiative which is aimed at making more than $4 billion in structural cost savings as a ‘game changer.’
‘Management have identified an opportunity to improve earnings by over 100%,’ say the Deutsche Bank team, adding that the company has previously proven its ability to boost operating profits in a declining revenue environment.
FedEx disappointed investors with its second-quarter earnings update in December, reporting revenue of $22 billion compared to $22.2 billion in the same quarter a year earlier and the $22.09 billion Wall Street consensus.
The company also created uncertainty over the full-year outcome saying it was unable to forecast fiscal 2025 MTM (mark-to-market) retirement plan accounting adjustments.
This time round, as well as scrutinising the results, investors will be keen to find out how the separation of the freight business is progressing after the company revealed its plans in December and whether there are any share buybacks planned for the 2026 financial year.
FedEx bought back $2 billion of shares in the first nine months of this financial year and is aiming to purchase a further $500 million of common stock by the end of the current quarter making a total of $2.5 billion.
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