Fri Sep 20 09:15:10 UTC 2024: ## FedEx Plunges 15% as Weak Demand and Cost Pressures Drag Down Profits
**Memphis, TN** – FedEx Corporation shares tumbled by over 15% on Friday, marking their worst performance in two years, after the company reported a dismal first-quarter profit. The decline reflects sluggish economic conditions and a growing shift by customers towards slower, cheaper deliveries.
The shipping giant, seen as a global trade barometer, experienced a significant drop in quarterly profit due to weak demand for its lucrative priority shipments. This, coupled with one fewer business day in the quarter and below-target cost savings, resulted in a larger-than-expected profit slump.
FedEx executives have lowered the top end of their earnings forecast, leading analysts to slash stock price targets. The company’s struggles reflect the ongoing challenge of rightsizing its cost base after rapidly expanding during the pandemic to meet surging demand.
Analysts and investors are concerned about the company’s ability to meet even revised earnings expectations for the year. BofA Global Research made the largest cut to its stock price target, reducing it by $37 to $308. Despite the negative outlook, BofA remains optimistic about FedEx’s long-term prospects, citing its pricing power, cost-cutting measures, and potential spin-off of its profitable Freight unit.
FedEx CEO Raj Subramaniam is currently implementing a complex restructuring plan aimed at slashing billions in overhead and consolidating its Express and Ground delivery units. While some of these initiatives are taking effect, persistently weak demand remains a major obstacle.
The decline in FedEx shares has also dragged down stocks of its rivals, United Parcel Service (UPS) and DHL, which are similarly facing challenges with sluggish demand and pandemic-era cost pressures.
First Piper 