Al Root

FedEx stock fell early Friday after Wall Street's reaction to its latest earnings report was less than stellar.

Coming tariffs are raising fears of recession and FedEx is a "really bad recession stock," Loop Capital analyst Rick Paterson said as he downgraded the shares to Sell from Hold.

Shares of the parcel shipper were down 8.1% at $226.31, while S&P 500 and Dow Jones Industrial Average futures were down 0.3%.

Thursday evening, FedEx reported adjusted earnings per share of $4.51 from sales of $22.2 billion. Wall Street was looking for $4.56 on sales of $21.9 billion.

For the full year, FedEx expects full-year sales to come in flat to down year-over-year, implying a fourth-quarter decline of about 5%, or about $1.2 billion short of the $22.2 billion Wall Street estimate. Full-year earnings-per-share guidance was reduced to a range of $18 to $18.60. In December, FedEx cut its fiscal 2025 earnings-per-share range to $19 to $20, from a prior range of $20 to $21.

Paterson, who lowered his price target to $221 from $283, doesn't see things getting better soon. FedEx is "synonymous" with global trade, and brewing trade wars will not be good for FedEx's business or investor sentiment. What's more, FedEx is a "really bad recession stock" because profit margins tend to take a hit during economic downturns.

Others are worried about trade and its impact on FedEx. "With many of the tariffs announced by the Trump administration yet to take effect, we see the prospects for a [manufacturing] inflection with accompanying improvement in freight demand to be increasingly remote," wrote Citi analyst Ariel Rosa in a Friday report.

He rates shares Buy, but cut his price target to $305 from $317.

Overall, 59% of analysts covering the stock rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for FedEx stock is about $297, down about $17 a share over the past week.

A downgrade to Sell doesn't change the Buy-rating ratio. Now, three analysts, or 9%, rate shares Sell. That's close to the average Sell-rating ratio for stocks in the S&P 500.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

March 21, 2025 08:15 ET (12:15 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.