If any investors deserve a break, its the owners of FedEx (NYSE:FDX). Despite the 19% rebound from its late-December low, FDX stock is still down by a third of its early 2019 peak. A myriad of factor ranging from a slowing economy to increased competition to tariff wars have collectively worked against FedEx.

Shareholders will get a chance at some relief after Tuesday’s closing bell rings. That’s when the delivery giant is slated to report its fiscal third quarter numbers.

For better or worse, expectations are low. Although sales are projected to improve, analysts are expecting earnings to shrink. If the company can’t meet or top lowered expectations, though, a renewal of the selloff could easily be in the cards.

Perspective on FDX Stock

All things considered, it could be worse. However, without lowering their buy/sell stance on shares, two different analysts have lowered their price targets on FDX stock within the past two weeks.

Earlier in the month Citigroup analyst Christian Wetherbee lowered his price target on FedEx stock from $225 to $210, explaining “We are factoring in a softer outlook for Express related to slower International trends and ongoing profit headwinds from the TNT integration, as well as somewhat lower profit growth at Freight.”

Cowen’s Helane Becker lowered her target from $242 to $237, citing an operating environment that’s unusually tough. Becker believes Brexit-related woes could weigh on FedEx’s International Express unit.

Most analysts remain optimistic for the long-haul though. Becker is excited about recent management changes, and anticipates annual earnings growth of between 10% and 15% for the next few years. Wetherbee, who maintains his “buy” rating, noted “real clarity may not be achieved until the company provides a full accounting of TNT, including potentially a write-down, and lays out fiscal [2020] targets in June.”

Stephens analyst Jack Atkins is also hopeful for the long haul, pointing out that cost reductions and scaled-back spending plans for 2020 could be used as catalysts to rekindle what Becker considers a stock with a “depressed” forward-looking valuation.

It’s All About Expenses

The analysts’ discussions are a microcosm of the confusion shareholders face heading into Tuesday’s third-quarter report, scheduled for release after the market closes.

As of the latest look, analysts are collectively calling for sales of $17.7 billion, up 7% year-over-year. But, those same pros anticipate earnings of only $3.17 per share, down from the $3.72 per share of FDX stock booked in the same quarter a year earlier.

The relative success or failure of the company for the quarter that ended in February will largely hinge on expense management.

Those headwinds have been blowing for a while, with ongoing pressure from rival United Parcel Service (NYSE:UPS) remaining in place, but with e-commerce titan Amazon.com (NASDAQ:AMZN) now handling more of its own delivery work.

The swell of resistance prompted CFO Alan Graf to concede a quarter earlier “These trends, coupled with the change in service mix at FedEx Express, are negatively impacting the segment’s financial results.” He added, however, “We remain committed to actively managing costs with a heightened focus on increasing efficiency across the organization.”

The effort to achieve efficiency and cut costs is in contrast with investments from FedEx as well as UPS to increase capacity. Noteworthy how disparate the results of its different divisions — Freight, TNT, Express, etc — have been, and will likely continue to be.

Looking Ahead for FedEx Stock

While challenges remain, at a forward-looking P/E of 10, those challenges may already be fully factored into the price of FDX stock.

Investors expecting Amazon to act on the often-rumored acquisition of FedEx, however, may not want to hold their breath. Aside from the company’s $47 billion price tag and the potential antitrust concerns such a deal could spawn, culturally and logistically, the two entities aren’t an ideal fit. Such a pairing would certainly help Amazon solve its “last mile” problem, but integration and wrestling control of FedEx away from founder and CEO would be significant if not impossible hurdles to clear…

… not that the matter would come up during the earnings call, except perhaps in the Q&A portion after official statements from the company are made.

Whatever’s in the cards on the acquisition front, investors have to assume FedEx will have to grow its way out of its current slump. That’s not happening in a big way just yet. For the year now underway, analysts are modeling a per-share profit of $15.99, up modestly from the year-ago bottom line of $15.31.

Cost-management will remain critical for the foreseeable future.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley.