FedEx Freight Spinoff Draws Positive Analyst Reactions
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Wall Street analysts offered overall positive initial reactions to the Dec. 19 news that FedEx Corp. plans to by 2026 spin off its less-than-truckload division into a separate, publicly traded company, noting the potential the deal affords to expand financial returns for shareholders.
“The tax-free spin-off of FedEx Freight shows a board and management team making difficult decisions for the benefit of shareholders and should create value for patient investors into the expected 2026 close,” Susquehanna International Group analyst Bascome Majors wrote. “The Freight spin-off is a clear win for [FedEx] shareholders on the valuation arbitrage opportunity alone.”
He noted that doubt had begun creeping in over the past few months about whether the rumored deal would happen, but that speculation gave way to investor enthusiasm once the news broke.
Majors also noted that comments from management about preserving the symbiotic benefits of the company’s freight and parcel segments should put to rest concerns some critics had about lost synergy.
TD Cowen analyst Jason Seidl in an investor note commented that the freight and legacy operations have already signed agreements that will allow the two networks to remain interconnected.
FedEx Freight leadership detailed in the announcement and a subsequent call with investors call plans to expand its dedicated sales force by 300 personnel, launch an enhanced LTL-specific invoicing system and reduce vendor costs through automation.
Seidl sees opportunities for the new company to increase market share through that expanded sales force, and also expects the new company to lean into productivity initiatives.
Majors noted the 18-month timeline to complete the spin is about six months longer than expected, but suggested the window could just be a maximum projection as opposed to a baseline.
“We believe the separation is set to unlock value potential as it creates the largest pure-play public North American less-than-truckload carrier,” said Bank of America analyst Ken Hoexter.
FedEx ranks No. 2 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and FedEx Freight No. 1 on the LTL sector list. The parent company also ranks No. 34 on the logistics TT100 and No. 2 on the global freight carriers TT50.
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