By Rashika Singh
(Reuters) – Shares of FedEx climbed 5.4% in premarket trading on Friday, after the parcel giant’s first-quarter results surprised Wall Street, driven by strong domestic deliveries and cost-cutting measures that offset a tariff-induced decline in international volumes.
The company, seen as a bellwether for global trade alongside rival United Parcel Service, has leaned on efficiency measures and tighter cost controls, including parking planes, closing facilities and merging units, as it works to slash billions of dollars in costs.
UPS shares rose nearly 2% before the bell.
Overall average daily volumes rose 4% in the quarter, as strong summer holiday demand lifted U.S. parcels, countering a 3% drop in international exports. Revenue per package climbed 2%.
“Key revenue growth drivers are likely to be ramping up of Amazon volumes, yield increases and absence of USPS headwind,” Daiwa Capital Markets analyst wrote in a note.
“Additionally, peak season volumes are likely to grow mid-to-high single-digits.”
Last year, FedEx ended its two-decade partnership with the U.S. Postal Service, a contract that had consistently weighed on earnings with high costs and thin margins.
Analysts, who had tempered their expectations amid global trade headwinds, anticipated a profit hit from the end of “de minimis” exemptions that allowed duty-free entry for shipments under $800. Instead, FedEx reported a 2.2% rise in adjusted profit for the quarter through August.
“FedEx’s solid F1Q and issuance of a FY26 guide was a positive surprise for a company that has been battered by a wide array of headwinds, although we note the bar was relatively low heading into the print,” J.P.Morgan analysts wrote in a note.
The company’s profit forecast for fiscal 2026 came in just below Wall Street estimates.
FedEx trades at 11.83 times projected 12-month forward earnings, versus UPS at 12.04, but both stocks are trailing the broader market amid softening industrial demand and a shift to cheaper ground shipping.
(Reporting by Rashika Singh and Shivansh Tiwary in Bengaluru; Editing by Leroy Leo)
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