FedEx Fiscal Q2 Outperformance Driven by Higher Priority Yields, Cost Cuts, Oppenheimer Says

MT Newswires Live12-20

FedEx's (FDX) fiscal Q2 outperformance was driven by higher US domestic and International Priority yields, continued cost cuts and increased US domestic volumes, partly offset by trade policy changes, higher wages and pressures in the Freight segment, Oppenheimer said in a Friday note.

The Express segment showed strong growth while Freight revenue and operating income declined, reflecting lower shipments, higher wages, and sales force expansion.

Even with FedEx's fiscal Q2 better-than-expected adjusted earnings per share performance, the midpoint of the company's fiscal 2026 adjusted EPS guidance moved up only $0.30, Oppenheimer said, adding that this is due to H2 headwinds from higher variable incentive compensation, grounding of the MD-11 aircraft and pressures from the Freight segment.

FedEx said late Thursday it expects MD-11 grounding costs to total roughly $175 million in the near term.

Additionally, the brokerage increased its fiscal 2026 estimates to $18.40 from $18.10, but said it is modifying its current year 2026 estimate to $18.70 from $19.14, primarily on incremental H2 2026 headwinds.

Oppenheimer rated FedEx as perform.

Price: 288.01, Change: +0.89, Percent Change: +0.31

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