By Shivansh Tiwary, Lisa Baertlein

(Reuters) -Shares of FedEx slumped over 15% on Friday, the worst in two years, after a dismal first-quarter profit drop due to anemic economic conditions and an ongoing customer shift toward slower, cheaper deliveries.

FedEx, seen as a global trade barometer, lost over $11 billion in market value. Its earnings report dragged down shares in rivals United Parcel Service and DHL, which are also grappling with sluggish demand and an overhead cost hangover from the early pandemic's ecommerce boom.

On Thursday, Memphis, Tennessee-based FedEx reported a bigger-than-expected drop in quarterly profit on weak uptake of lucrative priority shipments between businesses, one fewer business day and below-target cost savings. Executives brought down the top end of their earnings forecast - leading at least eight brokerages to cut stock price targets on Friday.

"For the third time in four years (FedEx) came out of their fiscal year gate with a disappointing first quarter," Susquehanna analyst Bascome Majors wrote in a client note.

The pressure on profitability shows that "FedEx is still a way off rightsizing its cost base after expanding rapidly to meet extra demand during the pandemic, when demand for shipping increased," AJ Bell investment director Russ Mould said.

FedEx tightened its full-year adjusted operating income forecast to between $20 and $21 per share, versus its previous range of $20 to $22 per share.

"This quarter's results make it incrementally more difficult to hit even downwardly-revised earnings expectations this year," Stifel analyst Bruce Chan said in a client note.

BofA Global Research made the heftiest stock price target cut, chopping it $37 to $308.

"We recognize it is a disappointing print and shares are likely in a credibility penalty box," BofA analyst Ken Hoexter wrote.

Nevertheless, BofA reiterated its "buy" rating on the shares given FedEx's ability to adjust pricing, further cut costs and benefit from a possible spin or sale of its profitable Freight unit, he said.

FedEx CEO Raj Subramaniam is in the middle of a complex restructuring that aims to slash billions of dollars in overhead and combine its Express and Ground delivery units.

While some of its initiatives have taken hold, persistently listless demand remains a threat, Raymond James analyst Patrick Brown said.

FedEx shares closed down 15.2% at $254.64 after falling to a session low of $253.51. Shares of UPS and European peer DHL closed down about 2.7% and 4.4%, respectively.

(Reporting by Shivansh Tiwary in Bengaluru; Additional reporting by Utkarsh Shetti; Editing by Vijay Kishore, Nick Zieminski and Alan Barona)