Citi Cites FedEx’s (FDX) Cost Cuts and Freight Spin-Off to Support Buy Rating

FedEx Corp. (NYSE:FDX) is one of the 10 most undervalued industrial stocks to buy according to analysts. A weaker industrial economy has impacted FedEx’s growth, and the company had to lower its profit guidance early in the year due to higher-than-expected inflation and softening demand. Since its last earnings report in March, little has improved on that front, and the stock has reflected this weakness, falling 19.4% year-to-date.

However, Citi analyst Ariel Rosa remains constructive on the name. Rosa, in a note dated June 18, reiterated a Buy rating on the stock, with an unchanged $267 price target. She highlighted a series of strategic changes intended to strengthen its long-term position, which serves as the basis for her optimistic view. Her rating also reflects confidence in FedEx’s ability to improve efficiency and earnings despite near-term challenges.

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The company is moving forward with its Network 2.0 plan, integrating its Express and Ground units to streamline operations. It is also preparing to spin off its Freight business, a move seen as unlocking more focused growth potential and value from this business.

In addition, FedEx continues to benefit from its DRIVE cost-cutting program, which has already delivered notable savings and is expected to support margin improvement over time. While the demand backdrop remains uncertain, especially with global trade slowing, Rosa believes FedEx’s restructuring efforts and leadership changes could pay off in the longer term.

FedEx Corp. delivers packages and freight to multiple countries and territories through an integrated global network. The Company provides worldwide express and freight delivery, ground small-parcels, less-than-truckload, supply chain management, customs brokerage services, trade facilitation, and electronic commerce solutions.

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