FedEx Corporation (FDX) reports second-quarter financial results Thursday after the market close, and analysts are watching closely to see whether the delivery giant can set the stage for what could be a value-unlocking spinoff next year.
The stakes are higher than usual. With a planned June 2026 spinoff of the Freight segment looming and trade policy headwinds mounting, this quarter serves as what one analyst calls "an important checkpoint" for the company's ability to execute on its strategic vision.
What Wall Street Expects
Analysts are forecasting second-quarter revenue of $22.79 billion, up from $22.00 billion in last year's second quarter, according to data from Benzinga Pro. FedEx has been on a solid run lately, beating revenue estimates in four consecutive quarters and in five of the last 10 quarters overall.
On the earnings side, the Street expects $4.10 per share, compared to $4.05 in the year-ago period. The company has beaten earnings estimates in two straight quarters and in six of the last 10 quarters.
The Bull Case and the Challenges Ahead
Stifel analyst J. Bruce Chan reiterated a Buy rating with a $305 price target, acknowledging that the path forward isn't entirely smooth. Management has flagged a significant headwind of roughly $1 billion for fiscal 2026 from trade policy changes and de minimis adjustments.
"Management's FY26 outlook incorporates a significant ~$1bn headwind from trade policy and de minimis changes, placing a premium on pricing discipline, network efficiency, and profitable share gains in the U.S. domestic market," Chan said.
The good news? Chan believes a challenging global trade environment could be offset by strength in U.S. domestic parcel delivery. The second-quarter results should reveal whether items like Express margins and international export pressure are moving in the right direction.
"Provided FedEx can navigate around integration pitfalls before the planned Freight spin in June 2026, we see meaningful upside to current valuation," Chan noted.
The analyst expects valuation to gradually climb as the mid-2026 spinoff approaches, with the separation potentially generating meaningful upside from current share prices.
Recent Momentum and Analyst Sentiment
Freedom Capital Markets Chief Market Strategist Jay Woods pointed out an encouraging trend: FedEx shares rose 2.3% after first-quarter earnings, breaking a four-quarter losing streak where the stock declined following quarterly results.
"Investors are hoping a new winning streak will begin after Thursday's news," Woods said in a weekly newsletter, adding that FedEx would likely lead a resurgence in the transportation sector.
Other Wall Street firms have been revising their price targets upward. Barclays maintained an Overweight rating while raising its target from $320 to $360. Jefferies kept its Buy rating and lifted its target from $280 to $315. Evercore ISI Group maintained an In-Line rating with a new target of $275, up from $239. Wells Fargo held its Equal-Weight rating but bumped its target from $280 to $290.
What to Watch For
Beyond the headline numbers, investors should pay attention to several key areas. First, any additional details on the Freight segment spinoff and how that business is performing. In the first quarter, the Freight segment reported lower revenue and higher wage rates, which weighed on overall results.
Second, package yields matter. The company saw higher U.S. domestic and international priority package yields in the first quarter, and whether these trends continue will signal pricing power.
Third, the Amazon.com Inc. (AMZN) situation could become a talking point. Reports suggest Amazon is considering building out its nationwide delivery network. While primarily aimed at offsetting Amazon's partnership with the U.S. Postal Service, such a move could mean fewer packages for FedEx to deliver.
Amazon and FedEx signed a new partnership this year after previously ending their working relationship in 2019. If Amazon expands its delivery capabilities, it could also increase competition for small and medium-sized business customers, a segment both companies are targeting.
FDX Price Action: FedEx stock traded at $282.21 on Wednesday, within a 52-week range of $194.30 to $295.24. Shares are up 3.2% year-to-date in 2025.