Bank of America has raised its price target on FedEx Corp (NYSE:FDX, ETR:FDX) to $285 from $270, while maintaining a ‘Neutral’ rating, following an investor meeting with company leadership.
Shares of FedEx traded down 8.5% at $267 on Thursday, with shares down 5% in the year to date.
The bank’s analysts wrote that they now value FedEx at 15.5 times its revised fiscal 2026 earnings estimate, citing continued progress on cost efficiency and network integration.
“We are encouraged by the company’s ability to improve margins despite volume softness,” the analysts wrote.
The firm raised its earnings-per-share estimates for fiscal second quarter, fiscal 2026 and fiscal 2027 by 4%, 2%, and 1%, respectively, to $4.15, $18.35, and $21.30.
At the meeting, FedEx’s executive chairman R Brad Martin said the company is focused on achieving “moderate revenue growth,” “significantly expanded operating margins,” and “significantly reduced capex,” along with improved free cash flow. He added that benefits from strategic opportunities and artificial intelligence “should provide significant value creation.”
CEO Raj Subramaniam highlighted progress on three key initiatives: Network 2.0, which integrates the company’s Ground and Express operations; Tri-color, its effort to align the international network’s cost structure; and its ongoing digital transformation using AI and advanced computing to enhance sales and operational efficiency.
CFO John Dietrich told investors that second-quarter earnings per share are expected to rise year-over-year, noting “F2Q26 EPS greater than $4.05.” He said FedEx is managing through the temporary grounding of some MD-11 aircraft by leveraging spare capacity and adjusting maintenance schedules, adding that the issue would not impede earnings growth.
Bank of America concluded that FedEx anticipates only “modest peak improvement” this year but continues to show progress in margin expansion and free cash flow generation.