Bank of America Securities analyst Ken Hoexter reiterated the Buy rating on FedEx Corporation
Hoexter noted that FedEx is progressing steadily on its structural cost initiatives, including Network 2.0, DRIVE, and Tri-Color.
However, international B2B volumes in F4Q25 faced headwinds.
While March volumes were stable, April weakened and May saw sharp Trans-Pacific declines as customers relied on existing inventories and waited for tariff relief, the analyst writes.
Following the 90-day U.S.-China reprieve, FedEx estimates the de minimis tariff on Chinese retailers has dropped to ~50% from 168%, though reporting complexity has increased, and FedEx is now prioritizing capacity utilization over pricing.
Hoexter highlighted that FedEx has partnered with Amazon.com, Inc
The deal will be financially beneficial for FedEx, with higher-than-average yields and weights in its domestic Ground segment.
The arrangement utilizes FedEx's nationwide capabilities for difficult deliveries, though Amazon will remain a smaller customer, the analyst writes.
The analyst lowered estimated EPS for 4Q25, FY25, and FY26 by 9%, 3%, and 1%, respectively, now projecting $5.55, $17.70, and $20.75. These were previously expected at $6.10, $18.25, and $20.90.
The price target now sits near the low end of the 12.5x-18.5x range due to macroeconomic pressures.
Price Action: FedEx shares are trading lower by 0.49% to $231.81 at last check Tuesday.
