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FedEx Stock Drops on Downgrade. Headwinds Are Mounting.

Sep 17, 2025 07:42:00 -0400 by Al Root | #Transportation #Street Notes

FedEx stock was downgraded by Evercore ISI. (Photo by Bruce Bennett/Getty Images)

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FedEx stock fell on Wednesday after catching a Wall Street downgrade. Too many headwinds are starting to blow, leaving one analyst with less confidence about the year.

Evercore ISI analyst Jonathan Chappell cut his rating to Hold from Buy. He reduced his price target to $243 from $249 a share.

Demand headwinds are “likely to provide greater risk to near-term [earnings] estimates,” wrote Chappell in a research report.

One problem that Chappel cited was President Donald Trump’s executive order that ends the tariff-free treatment of “de minimus” parcels—small, low-value packages that companies such as e-retailers Temu and Shein had shipped from China to the U.S. without paying taxes and duties on them. The removal will probably will increase costs—and result in fewer goods to ship.

FedEx can offset some revenue headwinds with cost-cutting, but “cost efficiencies are likely to be back-end loaded for this [fiscal] year,” added Chappell. FedEx’s fiscal year ends in May 2026.

“As the volume/revenue pressures accumulate,’ he said, “we no longer believe productivity enhancements alone are enough to fully reverse macro headwinds.”

The stock closed down 0.8% at $225.78. The S&P 500 dropped 0.1% and the Dow Jones Industrial Average rose 0.6%.

Shares were up for a good portion of the trading day. The starting point for shares might help explain the reaction. Coming into Wednesday, FedEx stock has fallen about 23% over the past 12 months.

While the stock slid, the average analyst price target has dropped to $264 from about $312 over the past 12 months. Still, overall analyst support remained relatively strong, despite target price cuts. Fifty-nine percent of analysts covering FedEx stock rate shares Buy, according to FactSet. A year ago, the ratio was higher at 65%, but the average Buy-rating ratio for stocks in the S&P 500 is about 55%.

Chappell’s downgrade came just before FedEx’s quarterly earnings report on Thursday after the close of trading. Wall Street projects earnings per share of $3.63, roughly flat with a comparable $3.60 earned in the first quarter of fiscal 2025.

FedEx didn’t provide full-year per-share guidance when it reported fourth-quarter numbers in June. The economic outlook was too uncertain. It did provide quarterly guidance. The EPS range given was $3.40 to $3.60.

Investors are waiting to see of FedEx can hit or top that range, and what management will say about the rest of the fiscal year.

Write to Al Root at allen.root@dowjones.com