FedEx stock should gain ground after the shipping giant spins off its struggling freight business, according to JPMorgan. The investment bank upgraded the delivery name to overweight from neutral. It also raised its price target on shares to $460 from $432, implying 15% upside from Tuesday's close. "The structural improvements underway at legacy Federal Express (RemainCo) through Network 2.0 are increasingly visible as the last several quarters of solid execution put the company on a credible path to its [2029] Targets," analyst Brian Ossenbeck said Wednesday in a note to clients. "Incremental interest from long-only investors in FDX has plateaued in our view, but should improve once the specific drivers and financials of RemainCo and Freight become visible post-spin." Earlier this month, the company's board approved a plan to spin off its FedEx Freight unit into an independent, publicly traded firm. The separation is expected to take effect Monday. FedEx's separation from its freight business should support the shipper's growing operational momentum, improving free-cash flow profile as well as its path to its 2029 targets, according to JPMorgan. "Sentiment on FDX has steadily improved over the last several quarters and continues to broaden as management delivers on its transformation initiatives, with hedge funds largely favoring the name going into the spin over long-onlies," Ossenbeck added. JPMorgan's call falls in line with consensus on the Street. Of the 29 analysts covering FedEx, 17 have a buy or strong buy on the stock, LSEG data shows. Shares have risen 38% since the beginning of the year.
