FedEx Stock Falls on Downgrade. Why Earnings May Be at Risk.

Coming into Wednesday trading, FedEx stock was down about 14% so far this year and down about 7% over the past 12 months. (Getty Images)

Key Points

• JPMorgan downgraded FedEx shares to Hold from Buy, lowering the price target to $274 from $284 per share.
• FedEx’s fiscal year 2026 earnings per share guidance of $17.20 to $19 is at risk due to weak freight fundamentals.
• Shippers are resisting higher rates as competitors increase capacity, impacting the parcel industry.

FedEx stock fell after the parcel shipper caught a downgrade. Freight fundamentals aren’t great —and that’s putting the company’s earnings guidance at risk.

On Wednesday, JPMorgan analyst Brian Ossenbeck downgraded FedEx shares to Hold from Buy. His price target dropped to $274 from $284 a share.

Share lost 1%, closing at $239.93; the S&P 500 gained 0.6% and the Dow Jones Industrial Average finished flat.

“We are increasingly concerned the full year [earnings per share] guide is at risk, given it already embeds a rebound in freight fundamentals,” wrote the analyst. “The high cost of separating the Freight segment and the recent operational underperformance will also likely weigh on the [less-than-truckload valuation] multiple post-spin.”

In December, FedEx said it would spin off its less-than-truckload freight service. LTL service is for customers who don’t require a full trailer and travel shorter distances, primarily serving industrial end markets.

As for guidance, FedEx expects earnings per share (EPS) of between $17.20 and $19 in fiscal year 2026, which ends in May. Wall Street currently projects $18.11. Ossenbeck projects $17.50.

“Separately, our discussions across the parcel industry confirm shippers are increasingly pushing back on higher rates while competitors add capacity to the market on a regular basis,” added Ossenbeck.

More capacity in a weak market isn’t a recipe for success. He also cut his price target for Hold-rated United Parcel Service stock to $85 from $96 a share.

Overall, 59% of analysts covering FedEx stock rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target is about $269 per share.

For UPS stock, 45% of analysts rate shares Buy. The average analyst price target is about $100. On Wednesday, shares traded as low as $85.21 but closed at $86.25, up 0.3%.

Coming into Wednesday trading, UPS stock was down about 32% so far this year. FedEx stock was off about 14%.

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