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FedEx Facing Potential Upside Backed by Margin Improvement, UBS Securities Says

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FedEx (FDX) and its freight business FedEx Freight (FDXF), expected to start trading June 1, will likely see margin improvement stories after the spinoff, UBS Securities said in a note Friday.

The margin improvement potential is a key lever for both companies, with each having "idiosyncratic drivers" like the combination of Express and Ground in the US for FedEx, and the investments in technology and sales staff at FedEx Freight, the investment firm said.

UBS analysts estimate 2027 earnings per share of $5.45 for FedEx Freight, assuming an operating ratio of 87.2% compared with 88.7% in 2026, and $22.60 for FedEx, based on an operating ratio of 92.1% versus 93% in 2026.

The investment firm is also forecasting 5.7% and 7.7% revenue growth in 2027 for FedEx and FedEx Freight, respectively, reflecting an "improving cyclical backdrop for freight."

UBS has a buy rating on FedEx, with price target adjusted to $445 from $446.

Shares of FedEx were up 2% in Friday trading.

Price: $396.70, Change: $+7.79, Percent Change: +2.00%

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