FedEx shares plummeted 11% on Friday, wiping out gains from the previous week, as the parcel delivery firm cut its annual forecasts, fueling concerns about the health of US manufacturing. The company’s warning comes amid uncertainty triggered by President Trump’s sweeping tariffs on trading partners.
CEO Raj Subramaniam expressed his concerns about navigating a “challenging operating environment” and a decline in industrial economy strength affecting higher-margin business-to-business volumes. This has prompted FedEx to reduce costs, with demand for lower-margin e-commerce deliveries outpacing higher-margin shipments.
Analysts warn that Trump’s import tariffs could trigger a recession and trade war, further weakening demand for transportation services. Morgan Stanley stated that the forecast cut may exacerbate concerns of structural pressures in the parcel business.
FedEx lowered its fiscal 2025 adjusted earnings per share forecast to $18.00-$18.60, from $19 to $20 previously. This was not a surprise, but the magnitude of the reduction, particularly for one remaining quarter, caught investors off guard. At least 10 brokerages cut their price targets on FedEx’s stock.
US President Trump’s tariffs have created uncertainty and prompted businesses to be more cautious with spending. FedEx and rival UPS are seen as barometers for global economic health due to their involvement in various industries.
Source: https://finance.yahoo.com/news/fedex-shares-drop-annual-forecast-093652731.html