A warning from FedEx was dragging down the stock and global markets on Friday. as analysts struggled to grasp the economic bellwether's gloom.
A profit warning from FedEx was ringing alarm bells for Wall Street and beyond on Friday, with shares of the economic bellwether slumping as analysts piled on downgrades and price target cuts.
FedEx FDX stock slid 20% to $165 in premarket hours after the company yanked guidance for the year, called for much lower quarterly profit and revenue and warned of a tough 2023 . The shipper blamed “macroeconomic weakness” in Asia and “service challenges” in Europe for a $500 million revenue shortfall in these regions.
Among Wall Street banks bringing the hammer down, JPMorgan cut shares to neutral from overweight, dropping their Dec. 2023 price target to $214 from $258. Lead analyst Brian P. Ossenbeck said they published a negative preview of results last week, but the shipper’s results and short-term outlook were “materially worse than expected” in the Express service, which offers guarantees on delivery times.
A similar downgrade came from KeyBanc Capital Markets, which slashed FedEx shares to sector weight from overweight. Acknowledging a move that may seem knee-jerk, analysts Todd Fowler and Carney Blake said in a note that they see a “difficult path forward [near term], particularly in light of decelerating macro datapoints combined with low confidence around management execution.
“FedEx will expedite long-term cost-out initiatives, but we see EPS risk into the midteens, yielding short-term downside risk to shares toward $150,” said Wetherbee and Winski.
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