Earnings Results: FedEx sales grow amid coronavirus outbreak, but earnings guidance is pulled

FedEx Corp. shares surged in the extended session Tuesday, after the shipper reported revenue that topped Wall Street estimates for the quarter despite the spread of COVID-19 but suspended its outlook for the year due to uncertainty.

FedEx FDX, +4.94% shares rallied 8% after hours, following a 4.9% rise in the regular session to close at $94.96. In comparison, the S&P 500 index SPX, +6.00% finished up 6%.

The company reported fiscal third-quarter net income of $315 million, or $1.20 a share, compared with $739 million, or $2.80 a share, in the year-ago period. Adjusted earnings were $1.41 a share, compared with $3.03 a share in the year-ago period.

Revenue rose to $17.5 billion from $17 billion in the year-ago quarter. Analysts surveyed by FactSet had forecast earnings of $1.41 a share on revenue of $16.89 billion.

“We continue to deliver for our customers and are ready to support increased demand for our International Express export services due to the significant reductions in intercontinental air capacity,” FedEx Chairman and Chief Executive Frederick Smith said in a statement. “While the global economic impact from recent social-distancing mandates is uncertain, we remain well positioned to assist our customers as they work to manage their supply chains and inventories. We will continue to support efforts to combat the pandemic.”

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FedEx said it was pulling its outlook for the year. Analysts had forecast 2020 adjusted earnings of $10.63 a share on revenue of $68.61 billion.

“We are suspending our fiscal 2020 earnings forecast for our consolidated and segment results due to the uncertainty caused by the coronavirus pandemic,” said Alan Graf, FedEx chief financial officer, in a statement.

“To mitigate these near-term headwinds and position the company for future earnings growth, we are attacking costs throughout the company by managing capacity, retiring our oldest and least-efficient aircraft, integrating TNT Express, and lowering our residential delivery costs by having FedEx Ground deliver FedEx SmartPost and certain day-definite FedEx Express packages,” Graf said.

Of the 27 analysts who cover FedEx, 14 have overweight or buy ratings, and 13 have hold ratings, with an average target price of $152.41, according to FactSet data.