FedEx shares tumble after exec’s exit

FedEx Corp. tumbled to the lowest in 18 months after Bank of America Corp. said a surprise executive departure from the courier’s air-freight division signaled a key financial goal is at risk.

Bank of America analyst Ken Hoexter cut his recommendation on FedEx to neutral and lowered his price target 28 percent after the resignation of David Cunningham as head of FedEx’s Express unit. Hoexter also cited a “decelerating global economy” as he estimated that the division would miss its target of increasing profit by more than $1 billion by 2020.

Cunningham’s departure after a tenure of just two years “could signal a reduction or delay in its profit improvement target,” Hoexter said Monday in a note to clients. “This is a rapid and, in our view, out-of-character change for a company that is still operated by its founder, chairman and CEO Fred Smith.”

The analysis spurred concerns among investors about the outlook for FedEx, which is an economic bellwether as the world’s largest cargo airline. Citigroup Inc. analyst Christian Wetherbee said last week that Cunningham’s exit, which was announced Dec. 7, increased the likelihood of a disappointing forecast from FedEx when the company reports quarterly results on Dec. 18 amid the peak holiday shipping season.

FedEx declined to comment on the personnel change or the analysts’ remarks.

The shares closed at 4.2 percent to $192.93 in New York after sliding to as little as $188.51 for the lowest intraday price since May 2017.