What Happened?
Shares of parcel and cargo delivery company FedEx (NYSE: FDX) jumped 5.5% in the afternoon session after Jefferies analysts upgraded the stock's rating from Hold to Buy. Citing the reason for the upgrade, the analysts added that investors were likely ignoring "idiosyncratic cost transformation." which is another way of saying that the earnings growth potential could be better than assumed.
The shares closed the day at $242.25, up 5.1% from previous close.
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What The Market Is Telling Us
FedEx’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock dropped 10.8% on the news that the company reported weak first-quarter (fiscal Q3 2025) results: its EPS and EBITDA fell short of Wall Street's estimates. To make matters worse, the company also lowered its full-year sales and profit outlook, pointing to ongoing struggles in the US economy, especially in its business-to-business segment.
On the other hand, FedEx narrowly topped analysts' revenue expectations. Still, this was a softer quarter.
Following the results, Loop Capital downgraded the stock from Neutral to Sell, citing two reasons: First, the Trump administration was set to roll out a major tariff strategy on April 2nd, 2025, and since FedEx is practically the face of global trade, that could spell trouble. Second, recession risks are climbing, and FedEx historically struggles in downturns. Its Express division runs on thin margins, meaning even a small drop in revenue can hit profits hard.
FedEx is down 11.8% since the beginning of the year, and at $241.80 per share, it is trading 22.9% below its 52-week high of $313.52 from July 2024. Investors who bought $1,000 worth of FedEx’s shares 5 years ago would now be looking at an investment worth $2,014.
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