HSBC upgrades FedEx rating after earnings surpass expectations, leading to a strengthening in yields

LootboxPhobia · 2026-03-20T21:53:27+00:00

HSBC upgraded FedEx's rating from underperform to hold and raised its target price to $360, expecting earnings to grow by 5-7%. The company's third-quarter results exceeded expectations, mainly due to improvements in core express services and price increases. The full-year outlook was also raised, with revenue expected to grow by 6-6.5%. Despite uncertainties related to fuel and demand, the overall outlook remains positive.

LootboxPhobia

2026-03-20 21:53:27

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Investing.com - HSBC upgrades FedEx’s rating from Reduce to Hold after the company reported better-than-expected Q3 results, mainly driven by improvements in core express parcel volume and pricing.

The broker raised its target price from $335 to $360 and increased earnings forecasts for fiscal years 2026 to 2028 by 5-7%.

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FedEx reported a 7% year-over-year increase in non-GAAP EBIT for Q3 FY2026, beating expectations by 16-17%, mainly due to a 6% rise in yields and steady growth in domestic and international export freight volumes. B2B freight volume grew by 6%, and international exports increased by 2%. Profit margins remained flat at 6.7%.

The company also raised its full-year outlook, now expecting revenue growth of 6.0-6.5% and adjusted EPS of $19.30-$20.10, above previous estimates. It projects non-GAAP EBIT of approximately $6.5 billion, reflecting a strengthening in pricing and demand trends in the express segment.

HSBC states that improved yield outlooks, especially in B2B freight, are key drivers behind the better-than-expected performance and upward guidance. The bank expects these trends to continue into Q4, with demand in early March maintaining the momentum seen in Q3.

The broker notes that, given FedEx’s relatively low exposure in the Middle East, the impact of regional conflicts should be limited, with fuel costs partially offset by weekly surcharge adjustments.

HSBC raised its EBIT forecasts by 4-7% and said that the improved pricing environment at FedEx is positive for peers, including United Parcel Service Inc., while the impact on Deutsche Post DHL Group is more complex.

However, the bank pointed out that weakness in the LTL (less-than-truckload) segment and uncertainties around fuel and demand could limit further upside, despite plans to spin off FedEx Freight in June.

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