FedEx (FDX) is expected to release its earnings report ending August 2024, where greater revenues are anticipated to produce a year-over-year increase in profitability. Although this widely accepted consensus provides information about the company's earnings potential, a clear price direction might come from a systematic approach.
Management's remarks regarding business circumstances during the earnings call will largely determine the sustainability of any immediate stock movement and future profit projections. Nevertheless, it's important to consider the possibility of a positive earnings-per-share (EPS) surprise.
Geopolitical Pressure On FDX Earnings
FedEx's forecasted quarterly earnings are expected to be $4.87 per share, up 7% from the previous year. However, analysts' reevaluations have decreased the consensus EPS estimate by 0.2% over the last 30 days.
After COVID, FDX still faces difficulties as volume and pricing trends return to normal. Furthermore, geopolitical uncertainty and rising inflation, especially in Asia and Europe, negatively impact consumer confidence and growth prospects. Lower package volumes probably impacted the quarter's revenues.
Demand-driven volume losses have probably impacted FedEx's largest division, the Express unit, as predicted revenue from the segment is expected to be 1.1% lower than in the fourth quarter of fiscal 2024.
FDX Management's Action To Ensure Profitability
FedEx has launched a cost-cutting program called DRIVE to adapt to the post-pandemic environment. These initiatives are anticipated to benefit the company's quarterly financial results.
Notable cost-cutting initiatives include staff reductions, aircraft parking, and fewer flying frequencies. In comparison to the same period the previous year, we anticipate a 2.6% decrease in salary and benefit-related expenses in the first quarter of fiscal 2025. These initiatives show FedEx's commitment to cost containment in the face of persistent revenue difficulties.
FedEx Stock Price Prediction Technical Analysis
In the daily chart of FDX stock price, the recent price shows a corrective downside pressure after setting a significant high at the 313.70 level. However, the current FedEx stock price hovers below the 50-day EMA with a struggle to hold the selling pressure, which might resume the broader bullish trend.
In the higher timeframe, the recent weekly candle closed as a bearish inside bar from the premium zone, which signals sufficient space for sellers. Moreover, the gap between the current price and the 200-day Simple Moving Average has widened, suggesting a confluence of bearish factors.
Based on the current market outlook, the upcoming earnings report could be a crucial factor to look at for this stock. An upbeat earnings report with a daily candle above the 291.99 high could be a potential continuation signal, aiming for the 350.00 level.
On the other hand, continued downside pressure with a bearish daily close below the 274.00 level might find support from the 200-day SMA level.
