Shareholders of FedEx Corporation (NYSE:FDX) will be pleased this week, given that the stock price is up 19% to US$296 following its latest full-year results. The result was positive overall - although revenues of US$88b were in line with what the analysts predicted, FedEx surprised by delivering a statutory profit of US$17.21 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the consensus forecast from FedEx's 26 analysts is for revenues of US$90.5b in 2025. This reflects a credible 3.2% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to climb 14% to US$20.05. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$90.7b and earnings per share (EPS) of US$20.49 in 2025. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.
The consensus price target held steady at US$315, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic FedEx analyst has a price target of US$359 per share, while the most pessimistic values it at US$215. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await FedEx shareholders.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that FedEx's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 3.2% growth on an annualised basis. This is compared to a historical growth rate of 6.3% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.2% annually. Factoring in the forecast slowdown in growth, it seems obvious that FedEx is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for FedEx. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that FedEx's revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$315, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on FedEx. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for FedEx going out to 2027, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 1 warning sign for FedEx that you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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