FedEx: Watch Q2 earnings for freight spinoff plans, big stock move, Stifel says

Investing.com– Global logistics giant FedEx Corporation (NYSE:FDX) is set to report its quarterly earnings later this week, with analysts at Stifel predicting a sharp move in the stock, especially if it announces plans to spin off its freight business. 

Stifel said that FedEx’s shares were set for a “sizable move” after the company reports its quarterly earnings after the close on Thursday, with the options market implying an at least 10% move in either direction. 

Stifel rates FedEx as Buy with a target price of $321.0. 

A main point of focus will be the firm’s update on the strategic review of its freight business, with Stifel seeing an over 50% chance the firm will proceed with a spin-off, “sooner than later.” 

“If it happens, we believe the potential upside is likely significant and could add an incremental ~$100 to the stock,” Stifel analysts said. The brokerage said the main value driver would be that FedEx’s less-than-truckload U.S. business is seen at a significant premium to FedEx’s core business. 

Investors have been constantly speculating over the potential freight spinoff, especially as FedEx embarked on a series of cost-cutting measures in the face of weakening revenue and shrinking margins. The company is regarded as a bellwether for global trade, and has struggled with slowing trends for the past two years. 

FedEx is forecast to post an EPS of $4.05 on revenue of $22.17 billion for the quarter to November 30, according to Investing.com data.