FedEx rises 2.6% as it prices $3.7B notes for Freight spin-off
Debt offering advances strategic separation of less-than-truckload unit as investors eye unlocking shareholder value
FedEx Corporation shares advanced 2.6% in Tuesday trading as the logistics giant priced $3.7 billion of senior notes to finance the planned spin-off of its Freight division, marking a significant milestone in its broader corporate restructuring strategy. The Memphis-based company's stock climbed to $312.42 on volume of 2.1 million shares, surpassing its average daily volume of 1.5 million shares, as investors processed the debt offering according to the company's announcement.
The debt pricing represents a critical step toward separating FedEx Freight, the company's less-than-truckload unit, from its core express and ground delivery operations. FedEx, which operates through its Express, Ground, Freight and Trade Networks segments, has been pursuing strategic initiatives to streamline its business portfolio and enhance operational efficiency amid evolving market demands in the transportation and logistics sector.
Investor enthusiasm for the spin-off reflects growing confidence that separating the Freight business will unlock hidden value within FedEx's $71.8 billion market capitalization. The less-than-truckload sector has faced margin pressure in recent quarters, with FedEx reporting a 13.3% year-over-year decline in quarterly earnings even as revenue grew 13.9%, according to company financial data. The spin-off could allow both entities to pursue more focused operational strategies and capital allocation priorities.
The stock's rally to $312.42 brings shares closer to their 52-week high of $318.83, a notable recovery from the yearly low of $190.84. Tuesday's gain places FedEx above its 50-day moving average of $286.70 and well above its 200-day moving average of $243.13, suggesting positive momentum as the spin-off timeline progresses. The company's P/E ratio of 16.86 and price-to-sales ratio of 0.80 indicate the stock trades at a relatively modest valuation relative to its industrial sector peers.
Analysts maintain a largely bullish outlook on FedEx despite recent earnings pressure, with 18 analysts rating the stock a buy versus 10 hold ratings and only two sell ratings, according to market data. The consensus price target of $308.46 suggests modest upside from current levels, though Tuesday's move has already exceeded that benchmark.
FedEx's decision to spin off Freight aligns with broader trends in the logistics industry, where companies are increasingly focusing on core competencies while shedding non-essential or underperforming assets. The less-than-truckload business, which handles shipments that don't fill entire trailers, operates on different dynamics than FedEx's core express time-definite delivery services and its Ground e-commerce focused operations.
The $3.7 billion notes offering will provide the Freight unit with independent capital structure necessary to operate as a standalone public company. Debt markets have remained relatively receptive to investment-grade issuers, and FedEx's strong credit profile—supported by $90.1 billion in trailing twelve-month revenue—positions the Freight unit favorably for the separation process.
Institutional investors own 80.6% of FedEx shares, indicating significant interest from large money managers who typically favor shareholder-friendly corporate actions such as spin-offs that can unlock value and improve operational transparency. The company's dividend yield of 1.88% and recent dividend declaration date of January 6, 2026, add to its appeal for income-focused investors during the restructuring period.
Looking ahead, markets will focus on additional details regarding the spin-off timing, the exact structure of the Freight unit's balance sheet post-separation, and potential management announcements regarding the strategic direction of both the standalone Freight business and the remaining FedEx operations. The successful pricing of the senior notes suggests the transaction remains on track, though final execution will depend on market conditions and regulatory approvals in the coming months.
For FedEx shareholders, the Freight spin-off represents a potential catalyst for continued stock appreciation as the market revalues each business independently. Tuesday's 2.6% gain signals initial approval of the financing strategy, though the true test will come when the separation is complete and both entities begin trading as independent public companies.