The shares of FedEx surged more than 12% after the company forecasted optimistic annual profits, leading investors to reassess its potential. The company’s fiscal 2025 earnings projection of $20 to $22 per share was slightly higher than analysts’ estimates, indicating the positive impact of cost-cutting measures to address declining freight demand. With $2.2 billion in savings expected from these initiatives, FedEx also announced plans to review its less-than-truckload business valued at $30 billion, receiving positive feedback from industry analysts.
FedEx’s strategic review of its Freight trucking business has the potential to benefit shareholders by positioning the business to compete more effectively and close the margin gap with peers. Jefferies analyst Stephanie Moore estimated the business’s worth at $30 billion, highlighting the earnings potential for FedEx shareholders.
FedEx’s shares were trading at $288.43, set to increase its market value by over $7.8 billion if gains persisted. Meanwhile, competitor United Parcel Service experienced a modest uptick in its shares. FedEx aims to consolidate its delivery services into a unified entity that improves efficiency, reduces costs and enhances competitiveness against industry rivals like UPS and Amazon. Its cost-cutting initiatives and restructuring plan resulted in an improved quarterly operating margin of 8.5%, demonstrating progress towards sustainable profitability despite challenges such as the upcoming expiration of the USPS contract and a weak industrial production environment.
Market analysts recognized FedEx’s improvements in profitability, capital allocation strategy and overall consistency in performance as encouraging signs for investors leading nine brokerages raised their price targets for the company following the results
