FedEx (FDX) Stock Forecast & Price Target

FedEx's Federal Express segment accounted for 86% of its total revenue in fiscal 2025, underscoring the dominance of its package delivery operations and its critical role in driving financial performance. The company has effectively implemented cost-saving initiatives, achieving approximately $4 billion in savings through its DRIVE program by fiscal 2025, while also targeting further improvements in margins and profitability enhancements for its segments. With management expressing confidence in ongoing integration efforts and improving pricing trends, FedEx is well-positioned to benefit from the growth in e-commerce and increased operating leverage moving forward.

FedEx's financial outlook is negatively impacted by a deterioration in its operating ratio, which declined by 40 basis points year-over-year to 79.2%, accompanied by a 4% drop in revenue and a 1% decrease in adjusted shipments. Additionally, macroeconomic headwinds, including changes in trade policies and increasing tariffs on international shipments, are expected to persist and further challenge the company's revenue and margins moving forward. The firm also reported a 6% decline in EBIT, reflecting ongoing struggles in both domestic and international markets amid weakening industrial and manufacturing conditions.