FedEx shares soared by over 12% on Wednesday as the company provided a positive annual profit forecast and announced plans to explore options for its less-than-truckload business, valued at $30 billion by analysts. The delivery giant projected earnings of $20 to $22 per share for fiscal 2025, which was slightly above analysts’ estimates.
FedEx is conducting a strategic review of its FedEx Freight trucking business, generating revenue of $2.3 billion in the latest quarter. Analysts believe that this review could unlock significant value for shareholders by closing the margin gap to peers. Jefferies analyst Stephanie Moore estimated the value of the business at $30 billion. The company is streamlining its delivery companies into a single entity, aiming to save costs and improve competitiveness against rivals like United Parcel Service and Amazon. The restructuring efforts, combined with cost-saving measures, boosted FedEx’s quarterly operating margin to 8.5%.
Investors and analysts have responded positively to FedEx’s performance, with at least nine brokerages raising their price targets in the wake of the company’s results. Garrett Holland, an equity analyst at Baird, praised FedEx for its consistency in execution, improving profitability, and thoughtful capital allocation. FedEx’s strategic initiatives and financial outlook have positioned the company for continued success in the future.
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