Stay away from FedEx as competition heats up, macro headwinds mount: JPMorgan
JPMorgan is moving to the sidelines when it comes to FedEx . The bank downgraded shares of the transportation and shipping giant to neutral from overweight. It also lowered its price target to $274 per share from $284, pointing to 13% upside from Tuesday’s close. Analyst Brian Ossenbeck noted that, despite trying to turn its business around, the company still faces several significant obstacles. “FedEx continues to pursue a strategic transformation which includes improving capital efficiency, significantly reducing operating costs, and combining the Ground/Express network over time,” he wrote. “We are Neutral on FDX as we believe there is upside driven by these idiosyncratic initiatives, however this is offset given a number of significant headwinds, mainly relating to the difficult industrial backdrop and increasing competition as the legacy hub-and-spoke networks are not utilized as much with logistics shifting to more regional footprints while B2C growth accelerates.” FDX YTD mountain FDX YTD chart International trade and tariff concerns could also impair FedEx’s operations in the Asia Pacific region. The company also faces structural issues such as profitability in Europe, especially after acquiring Netherlands-based TNT Express. “FedEx has experienced difficulties integrating TNT in Europe and is now targeting significant cost savings in the region, which could be more challenging to obtain than expected,” the analyst wrote. “Workforce reductions, in particular, take time and have up-front costs to obtain and could materialize slower than anticipated.” Ossenbeck added that these issues come at a tough time for the parcel industry, as shippers increasingly push back against higher rates even while competitors add capacity to the market. The analyst also believes FedEx’s full-year earnings guide is at risk, since it assumes a rebound in the company’s freight segment. “Management has moved ahead with the spin-off of the freight segment and if the separation does not occur on the expected timeline or comes with higher than expected dis-synergies, then FDX valuation could come under pressure,” the analyst added. FedEx stock has fallen 14% this year. The stock slid another 1.7% in the premarket Wednesday. ( Learn the best 2026 strategies from inside the NYSE with Josh Brown and others at CNBC PRO Live. Tickets and info here . )
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