01:50 PM EDT, 09/18/2024 (MT Newswires) -- FedEx's ( FDX ) fiscal first-quarter earnings could be affected by a "sub-seasonal" demand environment and macroeconomic headwinds, BofA Securities said Wednesday.

The parcel delivery giant is scheduled to report first-quarter results Thursday. BofA trimmed its non-GAAP earnings estimate to $4.76 a share from $5.21. Analysts polled by Capital IQ are looking for normalized EPS of $4.77. BofA said its revised outlook reflects the company's "one FedEx ( FDX )" reporting structure, which combines its former express, ground and services divisions into a Federal Express segment.

The brokerage expects "slight" year-over-year volume improvement in Federal Express, ahead of its US Postal Service contract loss starting next month, analyst Ken Hoexter said in a note to clients. The firm estimates the segment's first-quarter operating margin to be flat from a year earlier at 7.3%.

A projected sequential gain in freight's operating margin for the quarter is likely to be worse than its five-year historical improvement amid "sub-seasonal demand patterns" and a muted industrial economy as it laps the fallout from trucking company Yellow's last year bankruptcy, Hoexter wrote.

BofA lowered its fiscal 2025 EPS expectations to $20.25 from $21. It reduced its price target on FedEx ( FDX ) shares to $345 from $347 while reiterating its buy rating.

"We remain focused on FedEx's ( FDX ) plan to generate $2.2 billion in structural" cost savings in 2025, and $2 billion in savings between 2025 and 2027 from its plan to streamline the package networks, Hoexter said.

The company's shares were little changed in Wednesday afternoon trade, but have risen nearly 18% so far this year.

BofA said it sees momentum in FedEx's ( FDX ) structural cost takeout and potential value unlock from a strategic review of its freight business. In June, the company said it was conducting a review of the business that would likely complete by the end of the calendar year.

Additional details on a potential spin out of the business could further boost the company's valuation, Hoexter said Wednesday.

Price: 297.20, Change: -0.14, Percent Change: -0.05