Should FedEx’s (FDX) Freight Spin-Off and DRIVE Transformation Plan Require Action From Investors?

• In recent days, FedEx has outlined progress on its multi-year DRIVE and Network 2.0 transformation, reaffirmed its FY2026 guidance, and detailed plans to spin off FedEx Freight into a separate public company by June 2026 to improve operational focus and unlock value.
• At the same time, several research firms have reiterated positive views on FedEx’s long-term prospects, highlighting efficiency gains, technology investments such as AI and automation, and the planned Freight separation as key elements of a reshaped business model.
• We’ll now examine how FedEx’s planned Freight spin-off and ongoing DRIVE cost program reshape the company’s existing investment narrative.

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FedEx Investment Narrative Recap

To own FedEx, you generally need to believe that its DRIVE cost program, Network 2.0 integration and eventual Freight separation can lift profitability without eroding service quality or market share. The latest analyst optimism and reaffirmed FY2026 guidance reinforce cost and margin improvement as the key near term catalyst, while execution risk around the Freight spin off and broader industrial softness remain the most important threats; this week’s news does not materially change that risk balance.

Among the recent announcements, the detailed plan to spin off FedEx Freight by June 2026 stands out as most relevant here, because it directly touches both the company’s cost story and its exposure to weaker B2B and industrial volumes. As analysts factor this into their raised price targets, the separation, combined with DRIVE and Network 2.0, becomes central to how investors weigh the upside from structural efficiencies against the added complexity and restructuring costs that still lie ahead.

Yet behind the enthusiasm around cost savings and Freight’s separation, investors should still be aware of the execution and restructuring risk that...

Read the full narrative on FedEx (it's free!)

FedEx's narrative projects $95.1 billion revenue and $5.2 billion earnings by 2028. This requires 2.6% yearly revenue growth and about a $1.1 billion earnings increase from $4.1 billion today.

Uncover how FedEx's forecasts yield a $275.14 fair value, a 3% downside to its current price.

Exploring Other Perspectives

Five members of the Simply Wall St Community currently see FedEx’s fair value between US$275 and US$352, underlining how far opinions can stretch. You will want to weigh those views against the execution risk around the Freight separation and DRIVE cost targets, which could meaningfully influence how the company’s transformation ultimately shows up in results.

Explore 5 other fair value estimates on FedEx - why the stock might be worth as much as 24% more than the current price!

Build Your Own FedEx Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your FedEx research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.
• Our free FedEx research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate FedEx's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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