FedEx Corp. said Tuesday it acquired 7.9 million shares of its common shares worth $1.5 billion from investment banking giant Morgan Stanley & Co. as part of an accelerated share repurchase plan announced in June.
The accelerated buyback program is part of FedEx’s plan to repurchase up to $5 billion of common shares.
FedEx (NYSE: FDX) said it acquired the shares from Morgan Stanley (NYSE: MS) at current market prices. As of midday trading on Tuesday, FedEx shares were up 4.5%. The share price is down more than 27% in the past 12 months.
Much of the decline in FedEx stock price came on Sept. 16, when shares dropped around $44 a share the day after the company pre-announced fiscal 2023 first-quarter results well below analysts’ estimates and withdrew financial guidance for the rest of its fiscal year, which ends May 31.
Last week, Ravi Shanker, transportation analyst at Morgan Stanley, reduced his 12-month price target for FedEx to $125 a share from $250. In his note, Shanker said it is difficult to identify a “normalized” earnings outlook for FedEx due to the inability to forecast future declines in volume and revenue.
FedEx executives blamed the shortfall on rapidly and significantly declining demand at its FedEx Express air and international unit. The company also acknowledged it was unable to reduce costs fast enough during the quarter to offset the sudden declines.
Subsequently, FedEx announced plans to cut between $2.2 billion and $2.7 billion in costs in the current fiscal year and an additional $4 billion in costs during fiscal years 2024 and 2025.