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Yahoo
a day ago
- Business
- Yahoo
JPMorgan Slashes FedEx Corporation (FDX) PT to $260 Over Demand Concerns
On June 5, JPMorgan trimmed the price target for FedEx Corporation (NYSE:FDX) from $280 to $260 while reiterating an Overweight rating on the stock. Analysts have adjusted their outlook based on weak demand trends and the current tariff climate as the earnings date for FDX approaches. A driver unloading packages from a van for a time-critical delivery. FedEx's earnings call is scheduled for June 24, where many significant topics will be discussed. These include capacity utilization at FedEx, a recent collaboration with Inc. (NASDAQ:AMZN) for bigger packages, and savings goals with reference to Network 2.0. FedEx Corporation (NYSE:FDX) has solid operational efficiency, reflected by an $11 billion EBITDA and a 1.24 current ratio. Latest movements in fuel and extra handling surcharges have also drawn the attention of analysts. Despite the short-term obstacles, JPMorgan thinks FedEx is compelling based on a discounted sum-of-the-parts basis, keeping in mind the Network 2.0 integration and the spin-off resulting in FedEx Freight. However, the analysts warned investors that ongoing B2B friction could affect near-term performance. FedEx is a leading global logistics provider offering a comprehensive suite of services, including express shipping, ground delivery, and end-to-end supply chain solutions. While we acknowledge the potential of FDX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock. READ NEXT: and . Disclosure: None.
Yahoo
2 days ago
- Business
- Yahoo
FedEx Pilots Picket Over Prolonged Contract Stalemate
Roughly 300 FedEx pilots picketed the company's executive offices Tuesday in a show of displeasure with ongoing contract negotiations that have lasted more than four years. The Air Line Pilots Association, International (ALPA), which represents more than 5,500 pilots at FedEx, met with company officials under federally mediated bargaining sessions as recently as last week. But neither side came to a deal. More from Sourcing Journal Canada Post Denies Union's Request to Settle New Deal Via Arbitration Trade Pressures Prompt IATA to Lower 2025 Air Cargo Demand Forecast Canada Post Presents 'Final Offers' to Union, Who Says Labor Battle is 'Far from Over' 'FedEx has had four years to do the right thing, but instead it has chosen to invest in shareholders over its employees,' said Capt. Jose Nieves, chair of the FedEx ALPA master executive council, said in a statement. 'The pilots are done waiting. We've delivered through crisis and transformation, and we expect to be treated like professionals who enable corporate success.' Pilots began bargaining for a new contract in May 2021, attempting to modernize what the union called an 'outdated' labor agreement signed back in 2015. The parties initially achieved a tentative agreement in May 2023, but the pilots rejected the deal two months later. At the time, FedEx was offering a 30-percent increase for both pilot pay and legacy pensions. But the union said that was lower than a 40-percent hike the ALPA-represented United Airlines pilots received in a contract earlier that month. Since the rejection, both sides have made very little headway toward striking a deal, with negotiations having been on and off. 'We remain committed to reaching an agreement through the mediation process that is fair to our pilots, our other team members, and all FedEx stakeholders,' a FedEx spokesperson said. 'Informational picketing is a common occurrence during negotiations and does not impact our service.' A line of pilots standing outside the Memphis, Tenn. offices held up signs that read 'We're FedUp,' 'Stop profits over people,' and 'Stop outsourcing American jobs' as part of the picketing. The union's grievances target the company's ongoing Drive transformation, which is designed to cut costs at the logistics giant by $4 billion by the end of 2025, and another $2 billion through 2027. The transformation encompasses the Network 2.0 strategy, which is designed to consolidate the FedEx delivery network with fewer stations and routes and increase shipping efficiency, and the 'Tricolor' redesign of its air operations. The Tricolor strategy broke out FedEx's flights into three separate colors— purple, orange and white—based on customer demands, delivery timeliness and product category. ALPA's members feel the current contract for the FedEx pilots does not reflect some of these operational shifts. For example, with the company's partnership with the U.S. Postal Service (USPS) expiring last September, FedEx is expected to reduce its daytime flight hours by approximately 60 percent. Before the partnership ended, FedEx identified that it had a surplus of 500 pilots. 'The corporation has yet to bring forward basic insights into how it plans to employ the pilot group in the future, a major challenge to scope bargaining efforts,' the statement read, with the company saying the current agreement 'is based on a decades-old operation that FedEx is clearly signaling looks nothing like its future plans under a One FedEx, Tricolor, Network 2.0 operations strategy.' The 79,000-pilot union also has expressed gripes with FedEx after it replaced European 757 pilot flights with third-party contract carriers, taking the ALPA pilots out of rotation. FedEx had previously maintained a pilot base in Cologne, Germany, to complement its European hub at Charles de Gaulle Airport in Paris, before closing it in 2024. Although ALPA claims FedEx said the Cologne routes would shift to Memphis-based pilots, the union says company management steadily slashed the mainline European flights, with flights after April all being transitioned to third parties. 'The reality is clear—European FedEx 757 pilot flights have been completely replaced by third-party contract carriers,' said Nieves in a March statement. Nieves indicated FedEx executive chairman Fred Smith 'signaled growth in the Far East market,' suggesting that a similar scenario could happen to the Oakland, Calif.-based pilots who operate FedEx's Far East flights. 'One can only wonder whether those will be FedEx pilots flying under our established routes or if they will be outsourced as well,' said Nieves. FedEx has made more of a concerted push to leverage third parties to capture more of what chief customer officer Brie Carere has identified as an $80 billion air freight market, while keeping costs down. During a December earnings call, she said FedEx had a 'low-single-digit market share' in the market.
Yahoo
22-04-2025
- Business
- Yahoo
FedEx Network 2.0 closures hit California, Massachusetts
This story was originally published on Supply Chain Dive. To receive daily news and insights, subscribe to our free daily Supply Chain Dive newsletter. FedEx is closing three more U.S. ship centers on June 2 to streamline its network as it continues to merge its separate Express and Ground delivery operations. The following locations will shut down on that day as part of FedEx's Network 2.0 initiative, according to Worker Adjustment and Retraining Notification (WARN) Act notices: West Boylston, Massachusetts, ship center, impacting 78 employees Emeryville, California, ship center, impacting 79 employees Oakland, California, ship center, impacting 95 employees Affected employees will be provided with job placement assistance, relocation aid, or severance as applicable, FedEx spokesperson David Westrick said in an emailed statement. For example, a WARN Act notice filed for the Massachusetts ship center said the majority of its impacted employees will shift to nearby locations within 50 miles. "Team members at these facilities were notified several months ago, and many will be offered other roles within the company," Westrick said. At least 25 FedEx ship centers have seen closures or staffing cuts since 2023, with several occurring this year. The company's multiyear Network 2.0 overhaul is driving the reduction, as it looks to eliminate overlapping operations and trim costs. The overhaul is helping FedEx reduce its pickup and delivery costs by 10% for markets it has fully rolled out the program, President and CEO Raj Subramaniam noted in a December earnings call. Ship centers Supply Chain Dive has confirmed will close or reduce staffing since 2023 This embedded content is not available in your region. FedEx resumed its Network 2.0 push after the peak holiday shipping season, Subramaniam said on a Q3 earnings call in March. Five facilities have been "optimized" for the initiative since the start of the year, with 45 more to follow in Q4, he said. As a result of that progress, about 12% of FedEx's average daily volume globally will run through Network 2.0-integrated stations by the end of fiscal year 2025, which falls on May 31. That percentage is poised to spike the following year. "By the end of FY '26, we expect that number to be about 40%," Subramaniam said. Recommended Reading FedEx Network 2.0 consolidation spreads to 8 more locations
Yahoo
01-04-2025
- Business
- Yahoo
UPS to close 2 Kansas facilities as it scrutinizes network footprint
This story was originally published on Supply Chain Dive. To receive daily news and insights, subscribe to our free daily Supply Chain Dive newsletter. UPS will close two facilities in Kansas later this year as part of an ongoing push to streamline its U.S. network, a spokesperson told Supply Chain Dive. The carrier's location at 2601 East Wyatt Earp Blvd. in Dodge City is shutting down May 20. Additionally, UPS is shuttering a facility at 331 NE Industrial Lane in Lawrence on June 17. The company has not disclosed the number of workers that will be impacted by the decision, and no Worker Adjustment and Retraining Notification Act letter has been published on the matter as of Monday. "We are working to place as many employees as possible in other positions," UPS spokesperson Karen Tomaszewski Hill said in an email. "We will work with those who may be impacted throughout the process to provide support." The closures will add to operations cuts UPS has deployed since last year, with the carrier closing several sortation shifts throughout the U.S. as it makes its network more automated. Hill said the carrier's plans for the two Kansas facilities specifically are tied to a roughly $1 billion efficiency push executives mentioned during a January earnings call. "The changes underway include reassessing a small percentage of our U.S. operations," UPS said in a statement on its website. "Our employees and customers remain a top priority for us during this process, and we will continue to provide industry-leading service to customers in every community we serve." Rival FedEx has been undergoing its own operations overhaul, closing several ship centers as part of its Network 2.0 initiative to merge its separate Express and Ground networks. Recommended Reading UPS to cut sorting shift in North Carolina as more closures loom
Yahoo
30-03-2025
- Business
- Yahoo
FedEx Stock Hits 52-Week Low. Is the Dividend Stock a Buy Now?
FedEx (NYSE: FDX) hit a 52-week low on March 21 after reporting earnings and slashing its full-year guidance. However, the stock has since recovered nearly all of the losses from that sell-off -- although FedEx is still down over 14% in the past year at the time of this writing. Here's what's driving FedEx's guidance cut and if the dividend stock is worth buying now. FedEx has made significant progress in cutting costs and improving its operations, which has helped operating income grow faster than revenue. At the end of 2022, FedEx unveiled its DRIVE program, hosting an investor presentation in April 2023. In the presentation, FedEx said it had identified roughly $4 billion in value and savings that could be achieved by fiscal 2025. Additionally, its Network 2.0 program would generate another $2 billion in value by fiscal 2027. Network 2.0 aims to combine FedEx's Express segment with its ground division to create a more streamlined network. In its latest earnings announcement (third-quarter fiscal 2025), FedEx reiterated its full-year fiscal 2025 target of $2.2 billion in permanent cost reductions from its DRIVE program -- including $600 million in savings from the recent quarter -- building upon progress made in fiscal 2024. FedEx first provided the $2.2 billion target last June, so reaffirming the guidance is an encouraging sign that DRIVE is succeeding. However, FedEx's earnings forecast has not stayed consistent. In June, FedEx forecast $20 to $22 in adjusted fiscal 2025 earnings per share (EPS), cut the guidance to $19 to $20 per share in December, and then just reduced the guidance again down to $18 to $18.60 per share. Weaker economic expectations are to blame for the reduced guidance. Trade tensions weren't defined when FedEx reported second-quarter fiscal 2025 earnings in December. Now, the company could see pricing pressure and cost inflation from tariffs, which could slow transportation volumes. On the latest earnings call, FedEx said that many of its customers are already anticipating price increases, which could justify a price increase from FedEx to help offset costs. FedEx has done a good job capturing demand surcharge pricing. Timely deliveries, paired with DRIVE cost reductions, could help protect FedEx's margins even during a challenging macro environment. FedEx is an international business, but it's worth noting that the majority of deliveries are in the U.S. FedEx CEO Rajesh Subramaniam said the following on the earnings call: As a reminder, in terms of our revenues split by geography, we serve an extremely diversified customer base across the more than 220 countries and territories. To put some numbers around this, taking our FY '25 revenue through the third quarter, nearly 75% comes from our U.S. domestic services. Another approximately 10% of our revenue comes from non-U.S. intra-country or intra-regional services. And from a bilateral U.S. trade perspective, our biggest single-country exposure represents only about 2.5% of total revenue. In sum, tariffs could be a thorn in FedEx's side, but it has the pricing power to help offset higher costs, and the bulk of its business is domestic. Analyst consensus estimates call for $18.20 in fiscal 2025 EPS and $21.09 in fiscal 2026 EPS. Based on a share price at the time of this writing of $241.07, FedEx would have a price-to-earnings (P/E) ratio of just 13.2 based on fiscal 2025 guidance and 11.4 based on fiscal 2026 results. That's dirt cheap compared to FedEx's 10-year median P/E of 18.4. Granted, investors may want to assume that FedEx's earnings are less than currently expected if trade tensions ramp up and impact delivery volumes. FedEx pays a stable and growing dividend of $5.52 at the time of this writing -- good for a yield of 2.3%. The dividend is affordable even if earnings come down, so investors can count on FedEx for passive income. Transportation companies can go through cycles based on economic growth and trade. Tariffs inherently make trade more difficult, which is bad for FedEx. However, long-term investors shouldn't get too bogged down by economic cycles or trade policy. FedEx has done an excellent job with its cost-cutting efforts. The company generates strong cash flow to continue funding long-term investments in Network 2.0 and other projects despite a cyclical downturn. All told, FedEx remains a well-rounded value stock to buy now. Before you buy stock in FedEx, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and FedEx wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $682,965!* Now, it's worth noting Stock Advisor's total average return is 842% — a market-crushing outperformance compared to 165% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of March 24, 2025 Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends FedEx. The Motley Fool has a disclosure policy. FedEx Stock Hits 52-Week Low. Is the Dividend Stock a Buy Now? was originally published by The Motley Fool Sign in to access your portfolio
