FedEx Domestic Package Services Are Driving Growth, Bullish Analyst Says

FedEx Corporation (NYSE:FDX) on Thursday reported second-quarter revenue of $23.5 billion, beating analyst estimates of $22.79 billion and adjusted earnings of $4.82 per share, beating estimates of $4.11 per share.

FedEx now expects revenue to be up 5% to 6% in fiscal 2026, versus prior guidance for growth of 4% to 6%. The company raised the low end of its adjusted earnings guidance from a range of $17.20 to $19 per share to a new range of $17.80 to $19 per share, versus estimates of $18.22 per share.

Analyst Reaction

Stephens analyst Reed Seay says that the company’s earnings exceeded their estimate, driven by stronger margin performance at Express, as a stronger-than-expected top line translated to better leverage, while costs were only slightly higher than expected.

However, Freight results slightly offset this outperformance, adds the analyst.

The analyst reiterated an Overweight and maintained $330 price forecast.

Conference Call Highlights

The company’s executives highlighted that revenue growth and improved profitability were mainly driven by strong yield and volume across U.S. domestic package services.

The company noted progress on network transformation, including an approximately 25% reduction in Purple-Tail Trans-Pacific capacity and roughly 35% cut in White-Tail capacity, with roughly 24% of eligible daily volume now flowing through 355 Network 2.0 optimized facilities.

FedEx expects consolidated revenue growth in 2026 to be supported by continued U.S. domestic yield and volume gains, while second-half international export volume is expected to remain pressured.

FedEx Freight’s outlook has been lowered, with revenue expected to be flat to slightly down, offset by yield growth despite low-single-digit shipment declines, continuing headwinds from the MD-11 fleet grounding.

The company says that the planned spin-off of FedEx Freight remains on track for June 2026, with a listing on the NYSE under ticker FDXF.

The company says that the MD-11 aircraft are expected to return to service in Q4.

Analysts Price Forecast Revision

Several analysts raised the price forecast for the company:

• BMO Capital analyst Fadi Chamoun boosted the price forecast from $265 to $290.
• JP Morgan analyst Brian Ossenbeck raised the price forecast from $285 to $294.
• Jefferies analyst Stephanie Moore upped the price forecast from $315 to $326.
• Stifel analyst J. Bruce Chan revised the price forecast from $305 to $328.
• Wells Fargo analyst Christian Wetherbee increased the price forecast from $290 to $295.

Price Action: FDX shares are down 0.15% at $286.59 at the last check on Friday.

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