FedEx Corp (FDX) Spins Off Freight Unit. Don’t Miss the Point

FedEx Corp (NYSE:FDX) is one of the best stocks to buy according to billionaire Bill Gates. FedEx shares are up more than 50% over the past six months and have soared more than 85% over the past year. Analysts see more upside in the stock.

FedEx Corp (FDX) Spins Off Freight Unit. Don’t Miss the Point

On June 1, FedEx Corp (NYSE:FDX) completed the spinoff of its freight business into a separate publicly traded company called FedEx Freight (NYSE:FDXF). FedEx Freight shares began trading on the same day, with BofA Securities initiating the stock with a Buy rating and a price target of $185.

FedEx Freight is primarily focused on the less-than-truckload shipping business, and it’s the market leader with roughly 16% market share.

FedEx retained a 19.9% stake in FedEx Freight. Before the spinoff, this business represented around 9% of FedEx’s revenues at about $9 billion per year. It contributed roughly 15% of operating income at around $1 billion.

The FedEx Freight management has said the spinoff will allow the business to pursue growth more aggressively. The management is targeting 4% and 5% compound annual revenue growth, and 10% to 12% operating income growth over the medium term.

FedEx plans to dispose of its shares in FedEx Freight within two years for reasons that include debt repayment and dividend distribution.

FedEx Corp (NYSE:FDX) provides transportation, ecommerce, and logistics services. The company is best-known for its shipping services, where it handles the delivery of packages, freight, and documents through air and land.

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