Multiple major banks warn of long-term risks for FedEx Corporation (FDX.US) as the logistics sector as a whole is under pressure.

The Memphis-based FedEx Corporation (FDX.US) issued a downward earnings guidance, causing concern among investors. As of the time of writing, the stock had dropped by 13.14% in pre-market trading on Friday. The company's weak earnings guidance also led to a slight decline in trucking and logistics stocks in pre-market trading. During FedEx Corporation's earnings conference call, management stated that the company's first-quarter performance was negatively impacted by a soft revenue trend, with global priority business volume declining and deferred business volume growing. CFO John Dietrich said, "We had expected revenue and profit growth for the first quarter in our U.S. premium services, but this did not materialize." Morgan Stanley downgraded its rating on FedEx Corporation to "underweight" from "hold," with analyst Ravi Shanker stating that the company's performance is expected to fall short of expectations. He also emphasized that the significant gap between its performance and the trajectory needed to meet guidance indicates greater long-term earnings risk. Shanker warned, "We continue to see structural challenges in the company's package business in terms of volume, pricing, and mix, stemming from long-term changes in e-commerce supply chains, competition, etc." He stressed that despite facing several market and specific unfavorable factors in the future, the company needs to achieve earnings of nearly $17 per share over the next three quarters to meet its guidance target. Wells Fargo & Company expressed similar doubts about FedEx Corporation, noting that with a deviation of $1 from earnings expectations, the company only lowered its earnings forecast for fiscal year 2025 by 50 basis points, primarily focusing on better pricing assumptions and improved industrial production forecasts. DRIVE balance sheet is also expected to improve, especially in the second half of this fiscal year. Analyst Christopher Wetherbee warned, "Overall, this supports the company's expectations for a strong second half of the year, although traditional express deliveries may still be experiencing losses." On the other hand, Evercore ISI accepted a rough guidance, calling it a slowdown band, and maintained its "outperform" rating. Analyst Jonathan Chappell said it is worth noting that FedEx Corporation is still evaluating the possibility of splitting up its freight business, with the latest developments to be announced by the end of the year. Chappell stated that the multiple catalysts from the split, compared to the idea announced in June of this year, are even more attractive today. Trucking and logistics stocks were also affected by FedEx Corporation, including GXO Logistics (GXO.US), C.H. Robinson Worldwide (CHRW.US), RXO (RXO.US), Expeditors International of Washington (EXPD.US), Schneider National (SNDR.US), ArcBest (ARCB.US), and Werner Enterprises (WERN.US).