FedEx stock dips after weak earnings: opportunity or red flag?

Citi’s confidence in FedEx Corp (NYSE: FDX) remains unfazed even though the logistics giant reported disappointing earnings and guided for continued weakness ahead.

Its analyst Ariel Rosa dubbed the post-earnings decline in FDX a “buying opportunity” in a CNBC interview this morning, adding it’s a “cheap stock” to own at current levels.

Rosa, however, agreed that it’s a name suitable for long-term investors as it could “take some time to play out and see that earnings growth accelerate.”

Including today’s decline, FedEx stock is down close to 30% versus its 52-week high.

FedEx’s weakness is not due to company-specific issues

FedEx trimmed its full-year guidance for adjusted profit this morning to $18.60 a share at the top end of its range. The transportation giant had initially targeted up to $22 a share for its fiscal 2025.

But the weakness in the company’s outlook has more to do with macroeconomic uncertainty than internal issues, according to Citi analyst Ariel Rosa.

“FedEx has been executing well. They’ve had a number of cost cutting initiatives underway, but like any company really, it can’t avoid a disappointing macro-outlook.”

While the NYSE listed firm failed to meet estimates in its Q4, Rosa recommends buying FedEx stock today as it’s inexpensive to own at current levels.

How high could FedEx stock climb in 2025?

Citi currently rates FedEx stock at “buy” and sees upside in it to $305 that indicates potential for about a 25% upside from current levels.

“If we’re looking at it from an investment standpoint, we see a lot of value in transports,” the firm’s analyst Ariel Rosa told CNBC on Friday.

That said, FedEx failed to meet earnings estimates in its fiscal Q4. The multinational earned $4.51 a share in the fourth quarter versus $4.56 per share that analysts had forecast.

Still, FDX sales, at $22.2 billion in the recently concluded quarter topped $21.9 billion that experts had called for.

Is FDX worth owning amidst recession fears?

While Citi remains bullish on FedEx stock, investors should note that the company’s outlook does not include the potential impact of tariffs on its business.

That’s part of the reason why not everyone on Wall Street is as bullish on FDX as Ariel Rosa. In fact, analysts at Loop Capital even downgraded FedEx shares to “sell” following the Q4 earnings.

The investment firm is concerned that Trump tariffs could eventually lead to a recession and FDX is a “really bad recession stock.”

He sees FedEx as “synonymous with global trade” and expects it to take the brunt as Trump tariffs lead to retaliation from other nations and potentially leads to a full-blown trade war in 2025.

Nonetheless, FedEx is a dividend stock that currently yields 2.24%, which makes it a bit more attractive to own at current levels.