JPMorgan downgrades FedEx on freight concerns and weak pricing outlook

Investing.com -- JPMorgan downgraded FedEx to Neutral from Overweight, citing mounting risks to earnings guidance and structural challenges in its freight operations.

In a research note released as part of its third-quarter 2025 earnings preview for the transportation and logistics sector, JPMorgan said it is “increasingly concerned the full year EPS guide [for FedEx] is at risk given it already embeds a rebound in Freight fundamentals.”

The bank noted that “the high cost of separating the Freight segment and the recent operational underperformance will also likely weigh on the LTL multiple post-spin.”

JPMorgan added that its “recent channel checks across a wide range of contacts in the LTL industry merit a lower multiple” in its sum-of-the-parts analysis.

The analysts explained that their valuation for the less-than-truckload subsector “moves broadly lower after our recent channel checks confirmed price discipline across the industry is bent, but not broken, and will likely weigh on multiples until a more supportive volume backdrop emerges.”

The note also warned that shippers are “increasingly pushing back on higher rates while competitors add capacity to the market on a regular basis,” suggesting FedEx faces continued margin pressure in its parcel division.

While maintaining that FedEx still trades “at a 1x premium to the stock’s historical average on a P/E basis,” JPMorgan said it does “not expect FDX will re-rate higher until Federal Express can address some of its structural issues such as profitability in Europe and negative mix in the U.S.”

JPMorgan’s downgrade reflects a broader cautious stance on transport stocks amid “tariffs and trade policy uncertainty” and “subdued, yet stable,” spot truckload rates.

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