FedEx Could Unlock $20B for Investors with a Freight Spinoff

Barclays analyst Brandon Oglenski, a 5-star analyst, is taking a bullish stance on delivery company FedEx (FDX), claiming that a spinoff could bring major equity to shareholders. Oglenski believes that FedEx may spin off its Freight business after completing an ongoing strategic assessment. If it does so, this could offer an equity benefit of $10 billion to $20 billion to FDX shareholders.

Oglenski argues that this equity would come from several benefits of a freight spinoff. Among these are greater management focus and improved capital discipline. If the spinoff were to occur, this could support growth at both companies and bring with it a “profound direct impact.”

The Barclays analyst reiterated an Overweight rating for FedEx stock when discussing potential spinoff benefits. He also provides a price target of $365 for the shares. That’s a potential upside of 20.47% compared to the stock’s prior close of $302.98.

How Likely Is a FedEx Spinoff?

FedEx has been evaluating what to do with its Freight unit for several months now. The Freight business appears to be held back by FedEx’s larger operations. That’s shown by the continual shrinking of its network despite strong growth in the Less-Than-Truckload (LTL) sector.

The argument that Oglenski makes, alongside several other investors, is that the Freight business could tap into more of this growth without FedEx. If the package delivery giant comes to the same conclusion, its Freight operations may end up as a standalone company.

Is FDX Stock a Buy, Sell, or Hold?

Turning to Wall Street, the analysts’ consensus rating for FedEx is Moderate Buy based on 15 Buy, seven Hold, and a single Sell rating over the last three months. That comes with an average price target of $307.79, a high of $365, and a low of $200. This represents a potential upside of 1.25% for FDX shares.

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