No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - FedEx reported stronger-than-expected third-quarter results and raised its full-year outlook on Friday, signalling resilience in global shipping demand despite geopolitical tensions and rising energy costs.
The US logistics giant posted revenue of $24.0bn for the quarter ended 28 February, up from $22.2bn a year earlier and ahead of Wall Street expectations of $23.43bn.
Adjusted diluted earnings per share came in at $5.25, comfortably beating forecasts of around $4.09, while net income rose to $1.06bn, or $4.41 per share, from $909m, or $3.76 per share, a year earlier.
Adjusted operating income reached approximately $1.62bn, reflecting improved profitability.
Performance was driven by stronger US domestic and international priority package yields, higher volumes and continued cost savings from FedEx's ongoing transformation programmes, including its 'Network 2.0' initiative.
The company said it now expected permanent cost reductions from the efforts to exceed $1bn.
However, gains were partly offset by higher wage and transportation costs, increased incentive compensation and disruptions linked to global trade policy changes, as well as the continued grounding of parts of its MD-11 cargo fleet.
The Federal Express segment was the main contributor to earnings growth, benefiting from improved pricing and volumes, while the Freight division lagged due to weaker shipment levels and costs associated with its planned separation.
Analysts noted that strength in the Express business helped offset softer freight market conditions.
FedEx confirmed that the spin-off of its FedEx Freight unit remained on track for 1 June, a move widely seen by analysts as a potential value-unlocking catalyst.
The company had already raised $3.7bn in debt at the Freight unit ahead of the separation and expected the transaction to sharpen its focus on higher-margin delivery operations.
It also highlighted a planned minority investment in parcel locker firm InPost, as part of a consortium-led take-private deal priced at 15.60 per share, which was expected to close in the second half of 2026 and to be accretive to earnings from the first year.
Looking ahead, FedEx raised its 2026 guidance, forecasting revenue growth of 6.0% to 6.5%, up from a prior range of 5% to 6%.
Adjusted earnings per share were now expected to be between $19.30 and $20.10, compared with earlier guidance of $17.80 to $19.00, with even the lower end of the new range exceeding analyst expectations.
Shares in FedEx surged between 8% and 10% in premarket trading following the announcement, marking their biggest potential gain in nearly a year and reflecting investor confidence in the company's restructuring strategy.
Management said demand trends remained stable into March, despite disruption from the war in the Middle East, which had pushed up fuel costs and led to rerouting of some shipments.
While the region accounted for only a small portion of FedEx's business, executives cautioned that broader economic effects from higher energy prices and volatile trade flows could weigh on the global outlook.
At 0855 EDT (1255 GMT), shares in FedEx were up 7.02% in premarket trading in New York at $381.41.
Reporting by Josh White for Sharecast.com.