Fragile, handle with care! FedEx stock forecast

  (photo credit: INGIMAGE)
(photo credit: INGIMAGE)

One of the biggest and most widely-known package-shipping companies in the world, FedEx has faced a serious drop in demand over the last few years – and even announced the layoff of 10% of its officers and directors recently. But FedEx stock saw a price hike in March. Let’s find out what reason is lying behind it and whether it’s a good idea to invest in FedEx now.

FedEx is actively cutting costs. The company wants to make up for the losses with a new strategy. FedEx is reducing the number of employees, shortening flights, reducing office space, raising delivery prices and changing the way pickup and delivery locations operate.

All of this should seem to put the company in crisis, but FedEx stock is up more than 10% since the release of its third-quarter 2022 financial report. You can see this massive growth in a chart showing the movement of FedEx stock over the past month. Also, if you want to predict future market movements, you can use various trading tools such as the economic calendar.

FedEx Chart (Credit: TradingView)FedEx Chart (Credit: TradingView)

Was this financial report all it was cracked up to be? Well, net income was down by 30% and revenue by 6%. That doesn’t sound great in general, but the key figures turned out to be better than expected – like earnings per share at $3.41 instead of estimated $2.73. Moreover, FedEx improved its own profit forecast for the current fiscal year. 

Next, the shipping company is going to continue the process of offsetting losses and downsizing the number of employees. This should continue until the end of fiscal year 2025 – as a result, FedEx plans to cut expenses by $4 billion.

So, we have an interesting situation where the company has been losing revenue and the demand for its services, but the stock is performing well.

FedEx Chart (Credit: TradingView)FedEx Chart (Credit: TradingView)

Analysts believe that FedEx shares will sustain the trend. Consensus forecast is +11% over the next 12 months. 

It should go without saying, the analysts' opinion does not negate the need to do your own analysis. Market conditions change frequently, so it is absolutely necessary. Even if you already have an ingenious plan in your head – for example, buy FedEx stock and then send 100,000 parcels to increase demand (which we don't recommend doing, by the way).

This article was written in cooperation with TradingView