FedEx (FDX) Stock Forecast & Price Target

FedEx reported a strong fiscal 2025 performance, with its Federal Express segment contributing 86% to total revenue and achieving an 8% year-over-year increase in segment revenues, driven by robust domestic yields. The company's adjusted operating income rose by 24%, alongside a significant 48.7% year-over-year improvement in EBIT, which reached $1.56 billion, reflecting expanded margins of 7.7%. Additionally, the firm is optimistic about future growth, as evidenced by its guidance for a 10% revenue increase at the fiscal 2026 midpoint, supported by solid domestic package volume growth and international yield strength.

FedEx's adjusted operating income for the quarter fell to $242 million, excluding $152 million of spin-off expenses, leading to a 300 basis point contraction in margins to 11.3%, significantly below expectations. The company anticipates a decrease in fiscal Q3 EPS, consistent with normal seasonal trends and compounded by lower shipment volumes, which declined 3.9% year-over-year instead of the projected 1% growth. Furthermore, macroeconomic headwinds are intensifying, with an updated outlook indicating $600 million in operating income challenges in the second half due to increased compensation costs and persistent weakness in the less-than-truckload segment.