FedEx (FDX) Stock Forecast & Price Target

FedEx's Federal Express segment, which constitutes 86% of total revenue, demonstrated notable performance with an 8% year-over-year revenue increase and a 24% rise in adjusted operating income, positioning the company favorably for its projected 10% revenue growth guidance for fiscal 2026. International revenues benefited from stronger yields, with priority and domestic yields increasing by 9.4% and 7.3% respectively, while composite yield growth across domestic packages was recorded at 5.3% year-over-year. Additionally, the firm's EBIT of $1.56 billion represented a significant 48.7% year-over-year increase, contributing to improved margins that expanded approximately 100 basis points year-over-year, reinforcing a positive financial outlook for the company.

FedEx's adjusted operating income fell to $242 million, significantly underperforming previous expectations and leading to a margin contraction of 300 basis points to 11.3%, which is below both the company's targets and market consensus. The firm is also anticipating a decline in F3Q earnings per share amid lower shipment volumes and increased operational costs associated with its planned spin-off, suggesting persistent challenges within the freight segment amidst a weakening industrial environment. Additionally, the company has outlined $600 million in operating income headwinds for the second half of the fiscal year, exacerbated by factors such as higher incentive compensation accruals and ongoing impacts from operational disruptions.