FedEx Corporation (FDX) delivered a solid beat on Thursday, reporting second-quarter revenue of $23.5 billion against analyst estimates of $22.79 billion, while adjusted earnings of $4.82 per share sailed past the $4.11 consensus.
The delivery giant also gave investors a reason to smile with updated guidance. FedEx now expects fiscal 2026 revenue growth of 5% to 6%, up from prior guidance of 4% to 6%. The company also bumped up the low end of its adjusted earnings forecast, moving the range from $17.20-$19 per share to $17.80-$19 per share, compared to analyst estimates of $18.22.
What's Working
Stephens analyst Reed Seay noted that earnings exceeded expectations thanks to stronger margin performance at Express, where a better-than-expected top line delivered improved leverage while costs came in only slightly higher than projected. The Freight segment results provided a modest offset to the overall outperformance, but didn't dampen the positive story. Seay maintained an Overweight rating and a $330 price target on the stock.
Company executives emphasized that revenue growth and improved profitability stem primarily from strong yield and volume across U.S. domestic package services. That's the engine driving results right now.
Network Transformation in Progress
FedEx highlighted significant progress on its network overhaul. The company has cut Purple-Tail Trans-Pacific capacity by approximately 25% and slashed White-Tail capacity by roughly 35%. About 24% of eligible daily volume now flows through 355 Network 2.0 optimized facilities, showing tangible operational improvements.
Looking ahead to 2026, FedEx expects consolidated revenue growth supported by continued U.S. domestic yield and volume gains. However, second-half international export volume is expected to remain under pressure.
The FedEx Freight outlook has been tempered, with revenue now expected to be flat to slightly down. The segment faces low-single-digit shipment declines and ongoing headwinds from the MD-11 fleet grounding, though yield growth should provide some offset. Those MD-11 aircraft are expected to return to service in Q4.
The planned spinoff of FedEx Freight remains on schedule for June 2026, with shares set to list on the NYSE under ticker FDXF.
Wall Street Reacts
Several analysts raised their price targets following the results:
- BMO Capital analyst Fadi Chamoun increased the forecast from $265 to $290
- JP Morgan analyst Brian Ossenbeck lifted the target from $285 to $294
- Jefferies analyst Stephanie Moore raised the forecast from $315 to $326
- Stifel analyst J. Bruce Chan revised the target from $305 to $328
- Wells Fargo analyst Christian Wetherbee bumped the forecast from $290 to $295
FDX shares traded down 0.15% at $286.59 on Friday.
