FedEx Gains Narrow After Soft Quarterly Profit Forecast

Shares of FedEx Corporation experienced a volatile trading session on Friday as investors weighed a raised annual profit forecast against a cautious outlook for the current quarter and rising geopolitical risks. Initially jumping 7% in early trading, the stock pared those gains to close up approximately 1.3%. The company, based in the United States, increased its full-year earnings expectations but issued fourth-quarter guidance that fell slightly below analyst projections. The conflict involving Israel and Iran has significantly impacted the logistics industry, driving up air freight rates and forcing the re-routing of global flight paths. While FedEx, which operates the world's largest cargo air fleet, reported that demand in the first half of March remained consistent with previous trends, analysts noted that broader market anxiety regarding the Middle East conflict contributed to the share price retreat. The company has suspended most operations in the affected region but has benefited from growth on Asia-Europe routes by redeploying capacity from Asia-U.S. lanes. Jonathan Chappell, an analyst at Evercore ISI, pointed out that while the annual forecast was lifted, the midpoint for the fourth quarter was less aggressive than expected. > It may prove conservative, but it doesn't point to a continuation of the past quarter's upside. For the fourth quarter ending in May, the company anticipates an adjusted profit per share of approximately $5.80 at the midpoint, which is lower than the $5.85 consensus estimate. Despite these concerns, the company’s third-quarter performance was strong, particularly within its Express segment, which recorded its most profitable peak season ever. This success came despite a sluggish industrial sector and limited restocking by retailers. Morningstar analyst Matthew Young highlighted that rising B2B activity has provided a unique advantage for the company compared to its peers. In terms of market competition, FedEx has recently outperformed its rivals. The company’s market capitalization surpassed that of United Parcel Service, Inc. this month for the first time since its initial public offering in 1978. So far in 2026, FedEx shares have climbed over 23%, while UPS shares have declined by 2.7%. FedEx currently trades at 16.58 times projected 12-month forward earnings, compared to 13.23 for UPS. In Europe, Deutsche Post AG saw its stock price remain relatively flat, closing up 0.1% on Friday. The company is currently undergoing a significant multi-year restructuring process. This plan involves cutting billions in costs, integrating its Ground and Express networks, and spinning off its Freight trucking business on June 1. Analysts from Stifel expressed confidence in the company's long-term strategy and its ability to maintain industry leadership. > We expect FedEx to continue to outperform the industry, and we expect Freight to improve profitability once it has passed the separation friction.