FedEx Stock Tanks Amid 'Challenging' Demand Environment
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Key TakeawaysFedEx shares plunged 15% Friday, a day after the package delivery giant missed quarterly estimates and reduced its forecast as it faced what CEO Rajesh Subramaniam called a "challenging Q1 demand environment," especially in the U.S.The company pointed to weakness in the industrial economy impacting business-to-business revenue.FedEx also said it faced a decline in priority shipping volume and growth.
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 ResultsChief 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 TargetFollowing 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. Read the original article on Investopedia.
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