FedEx Positioned As Largest Pure-Play North American LTL Carrier Post-Separation: Analyst

BofA Securities analyst Ken Hoexter reiterated a Buy rating on FedEx Corporation FDX, raising the price forecast to $348 from $325.

Yesterday, the company reported adjusted earnings of $4.05 per share, beating the $3.91 consensus estimate. Quarterly revenue came in at $22 billion, missing the $22.11 billion analyst consensus estimate.

FedEx now expects approximately flat revenue year-over-year, versus its prior forecast of a low single-digit percentage increase.

The analyst mentions that CEO Raj Subramaniam highlighted the potential for significant value creation through improved strategic, operational, and financial execution for FedEx.

Hoexter writes that the sum-of-the-parts valuation suggests a potential value of $348 per share.

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This apart, according to the analyst, FedEx Freight will retain its name, collaborate with FedEx, expand its dedicated sales force by about 300, launch a new pricing and invoicing system for Less-than-truckload, and reduce vendor spending through increased automation.

The analyst writes the separation will unlock value, positioning the company as the largest pure-play public North American less-than-truckload carrier.

Hoexter increased EPS estimates for FY25 and FY26 by 2%, raising them to $19.45 and $23.15, respectively, from $19.15 and $22.80.

Overall, the analyst notes that FedEx benefits from cross-border trade growth and demonstrates structural pricing gains as carriers work to improve investment returns.

Price Action: FDX shares are trading higher by 0.97% to $278.56 at last check Friday.

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