It was bad enough for FedEx (NYSE:FDX) when its second quarter earnings landed with a nearly-audible “thud” in investors’ collective laps. But now, signs are emerging that suggest next quarter won’t mean much in the way of hope either. The losses carried on, and FedEx was down over 11% in Wednesday afternoon’s trading.
Those who watched the earnings report come out knew the news wouldn’t be good. And indeed, it wasn’t; FedEx posted misses on both earnings and revenue figures. And its guidance looked for losses where, previously, it looked to at least tread water. The word from the earnings call only got worse, as FedEx’s valiant efforts to trim costs with greater efficiencies were all but wiped away by a worsening macroeconomic situation. The only good news from Chief Customer Officer Brie Carere was that FedEx was starting to gain parcel share worldwide. That meant that it was, at least, getting a slightly bigger slice of that rapidly vanishing pie.
Maybe a Little Too Efficient
We know the news isn’t good for FedEx, so the last thing it needed was a report from Metro Atlanta, where a FedEx driver was recorded throwing packages during deliveries. The reports go back nearly five months, and several packages were found to be damaged at the time. It’s certainly efficient to toss packages instead of walking those last few steps, but it really doesn’t do the company’s image any good. Throw in reports of deaths from injury at a FedEx hub in Memphis—the latest of which claimed the life of package handler Verna Mae Jackson—and issues of efficiency seem like a lesser problem than their solutions.
Is FedEx a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on FDX stock based on 16 Buys and six Holds assigned in the past three months, as indicated by the graphic below. After a 49.78% rally in its share price over the past year, the average FDX price target of $305.90 per share implies 23.5% upside potential.
