FedEx's (FDX) fiscal Q1 results face pressure from a slump in July business to consumer package volume growth and weaker less-than-truckload shipment performance, UBS said in a Thursday research report.

In response to a softer volume trend, the brokerage said it lowered its Q1 earnings forecast to $3.57 per share from $3.70. UBS also cut its Q2 earnings estimates to $4.04 per share from $4.13, according to the note.

The package delivery company faces challenges in its global business due to the worldwide removal of the de minimis exemption. As a result, UBS said its adjustments for Q1 through Q3 translate to a 2% drop in its full-year fiscal 2026 earnings forecast to $18.34 per share.

FedEx plans $1 billion in cost reductions for fiscal 2026 through initiatives, but the company could exceed this figure if volumes are weaker than expected. UBS expects fiscal 2027 cost savings to reach $2 billion as the company realizes improvements from its Network 2.0 initiative.

The brokerage reiterated a buy rating on the stock and cut its price target to $293 per share from $297.

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