Key Takeaways

• FedEx is scheduled to report its fiscal second-quarter earnings after the bell Thursday.

• Analysts are largely bullish on the stock, and project another quarter showing a small decline in revenue before the shipping giant returns to growth.

• FedEx has said it plans to complete a review of options for its freight business by the end of the calendar year, as analysts have said it may "unlock value" for the business to be spun off.

FedEx (FDX) is set to report its fiscal second-quarter earnings after the market closes Thursday, with analysts expecting another quarter showing a small decline in revenue before the shipping giant returns to growth.

Analysts are largely bullish on FedEx's stock, with 11 of the 15 analysts who follow FedEx and are tracked by Visible Alpha rating it as a "buy," along with three "hold" ratings and one "sell." Their average price target of about $308 would imply roughly 9% upside from Friday's closing price of $283.42. The stock has gained about 12% in 2024 so far.

FedEx is projected to report second-quarter revenue of $22.14 billion, down slightly from last year's $22.17 billion. Net income, however, is expected to rise nearly 3% year-over-year to $925.1 million as the shipping company has worked to cut costs.

After the second quarter, estimates compiled by Visible Alpha suggest FedEx could return to year-over-year revenue growth in the coming quarters.

'One of the Most Consequential Quarters in Years'

As part of its restructuring effort announced last year, FedEx said it would bring FedEx Ground, Services, and Express under the same corporate umbrella, while FedEx Freight remained a separate business.

Once the restructuring was completed, FedEx said in its fourth-quarter report in June that it was "conducting an assessment of the role of FedEx Freight and our portfolio structure," with the review expected to be done by the end of 2024, according to a transcript provided by AlphaSense.

Citi analysts wrote Friday that the coming earnings report "could be one of the most consequential quarters in years" for FedEx, and suggested spinning off the Freight business into a standalone company could "unlock value," but may not be the best option for the long term.

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