FedEx Falls to Support After Unexpected Guidance

FedEx Corporation (FDX) shares fell more than 4% during Wednesday's session after weak third quarter earnings and lower guidance. Revenue rose 3% to $17 billion, missing consensus estimates by $700 million, and non-GAAP earnings came in at $3.03 per share, missing consensus estimates by seven cents per share.

The company also lowered its guidance for the full year, citing slowing macroeconomic conditions and weaker global trade growth trends. Management expects full-year earnings per share of $15.10 to $15.90, which is lower than its previous guidance and the $15.91 consensus estimate. The anticipated slowdown is also having a broad effect on the stock market.

Analysts had a mixed reaction to the financial results. Credit Suisse's Allison Landry raised her price target on FedEx shares from $236.00 to $241.00, saying that the bad news is out of the way and that downside risk remains limited. On the other hand, KeyBanc's Todd Fowler lowered his price target from $240.00 to $215.00, saying that FedEx's financial results reflected slower growth and an unfavorable mix with respect to its Express operations.

From a technical standpoint, the stock broke down from trendline resistance to trendline support near $173.00. The relative strength index (RSI) fell to neutral levels of 40.51, while the moving average convergence divergence (MACD) remains neutral. These technical indicators provide few hints as to future price direction but leave room for more downside ahead.

Traders should watch for a rebound from trendline support toward upper trendline resistance at $180.00 over the coming sessions. If the stock breaks down from support, traders could see a move toward S2 support at $166.70 or prior lows near $150.00, although that scenario appears less likely to occur. 

The author holds no position in the stock(s) mentioned except through passively managed index funds.