Airfreight and delivery giant FedEx (FDX) posted mixed results for its late Q4 report Tuesday to wrap up its 2023 fiscal year. FedEx stock eased after hours and shares cleared a base prior to the report.
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FedEx earnings fell an average 27% the last three quarters but still managed to top analyst estimates the last two quarters. Sales declines accelerated the past two quarters and missed Wall Street views.
In April, FedEx announced its DRIVE initiative to consolidate its FedEx Express, FedEx Ground, FedEx Services and other operating companies into the single Federal Express Corporation under the FedEx brand. FedEx expects DRIVE to generate $4 billion in permanent cost reductions in 2025 after the transition is fully implemented in June 2024.
A Raymond James note early Tuesday said the initiative will drive better margins, earnings and free cash flow in the coming years. The DRIVE transition, focus on trimming costs and capital allocation, along with a shareholder-friendly capital return program should improve returns, the firm wrote. Raymond James lowered its price target on FedEx stock to 280 from 285 but maintained the outperform rating on shares.
Meanwhile, Jefferies says “all eyes will be on” FedEx’s fiscal 2024 guidance during results this afternoon. Wall Street could react negatively to an “overly optimistic” earnings target from the company, Jefferies wrote in a research note early Tuesday. An EPS guidance “materially north of $20 would be viewed as a stretch-goal,” the firm wrote while a “realistic range” would be between $15 to $21 per share. Jefferies maintained its 230 price target on FedEx stock and its hold rating on the shares.
Earnings
For the Q4 results late Tuesday, FedEx reported a 28% earnings drop to $4.94 per share while revenue fell 10.2% to $21.9 billion. FactSet analysts expected earnings diving to $4.85 per share on $22.55 billion in sales.
Full year adjusted earnings tumbled 27% to $14.96 per share while revenue slipped 3.5% to $90.2 billion. The results topped earnings estimates of $14.80 per share but fell short of sales…
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