Jim Cramer Predicts FedEx Stock Surge Post Spin-Off
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 days ago
0mins
Source: CNBC
- Value Enhancement from Spin-Off: Jim Cramer believes that FedEx's stock could rise by 25% post spin-off of its freight business, potentially reaching $500, reflecting optimistic market expectations regarding the company's transformation.
- Positive Market Reaction: FedEx has already climbed 38% year-to-date, indicating strong investor confidence in the company's transformation under CEO Raj Subramaniam, particularly with the upcoming freight division separation on June 1.
- Analysts' Favorable Outlook: Wells Fargo views the FedEx Freight split as a compelling 'self-help' story in an improving trucking market, emphasizing pricing power and cost reductions, while Citi highlighted cost savings and improved profitability.
- Long-Term Growth Potential: FedEx is projected to generate over $93 billion in revenue for the fiscal year ending in May, with Jim noting a $7 billion addressable market opportunity in AI infrastructure-related transportation services, showcasing its long-term growth potential in e-commerce and data centers.
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Analyst Views on FDX
Wall Street analysts forecast FDX stock price to fall
20 Analyst Rating
13 Buy
6 Hold
1 Sell
Moderate Buy
Current: 411.400
Low
210.00
Averages
315.05
High
365.00
Current: 411.400
Low
210.00
Averages
315.05
High
365.00
About FDX
FedEx Corporation provides customers and businesses with a portfolio of transportation, e-commerce, and business services. The Company offers integrated business solutions utilizing its flexible and efficient global network. Its segments include Federal Express, FedEx Freight, and Corporate, other, and eliminations. Federal Express segment includes express transportation, small-package ground delivery, and freight transportation, and it also operates combined sales, marketing, administrative, and information-technology functions in shared service operations for United States customers. FedEx Freight segment includes FedEx Freight (LTL freight transportation) and FedEx Custom Critical (time-critical transportation). Corporate, other, and elimination segments include FedEx Dataworks, Inc. (FedEx Dataworks), FedEx Office and Print Services, Inc. (FedEx Office), and FedEx Logistics, Inc. (FedEx Logistics). FedEx Logistics offers customs brokerage, specialty transportation, and others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Spin-off Transaction: The spin-off of FedEx Freight is expected to be completed on the same day, allowing the parent company FedEx (FDX) to remain in the DJTA, which could unlock additional value for its remaining business and enhance market confidence.
- Index Weight Impact: American Airlines Group has a weight of less than 0.5% in the DJTA due to its low share price, and this change is anticipated to improve the overall performance and attractiveness of the index, reflecting a renewed focus on the transportation sector.
- Market Expectations: Analysts predict that the inclusion of FedEx Freight will enhance the overall value of the DJTA, with J.P. Morgan noting that the spin-off could unlock more potential value for FedEx's remaining business, further driving investor interest and confidence.
See More
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- Market Performance Review: Despite falling oil prices, the S&P 500 and Nasdaq Composite remained steady in Friday's trading, with the S&P 500 up 5% and Nasdaq over 8% in May, reflecting the positive impact of a strong rally in AI stocks on the market.
- Amazon Satellite Plans Hit Snag: Amazon's Blue Origin experienced a rocket explosion during a launch test in Florida, with no satellites on board; however, this incident could delay the deployment of Amazon's planned low-Earth orbit broadband satellite network, impacting its competition with SpaceX's Starlink.
- Investor Focus: Amazon has deployed approximately 240 satellites over the past year, and while partnerships with multiple launch providers mitigate the risk of a single launch failure, potential delays in future launches could complicate the timeline for its commercial service, expected to start in Q3.
- M&A Update: An FCC filing revealed details of Amazon's acquisition of Globalstar, including the transfer of Apple's 20% stake, marking a significant step in Amazon's strategy to expand its satellite offerings into direct-to-device services.
See More
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- Dell Stock Surge: Dell Technologies' stock surged 30% on Friday, marking its best single-day performance ever, driven by strong demand for AI servers and data center infrastructure, which also bolstered Jim's bullish outlook on Nvidia.
- Cybersecurity Earnings Outlook: CrowdStrike and Palo Alto Networks are set to report earnings next week, with Jim highlighting that both stocks have rallied significantly during the quarter, although they face challenges heading into earnings, he remains optimistic about their long-term prospects.
- Rapid Fire Recap: At the end of the video, Jim covered stocks like Applied Materials, Honeywell, and FedEx, emphasizing their market performance and showcasing his focus on a diversified investment portfolio.
See More
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- Escalation of US-Iran Conflict: Following weeks of paused action, the US and Iran have resumed airstrikes, complicating hopes for a permanent resolution to the conflict, which is impacting global oil supplies and market sentiment.
- Strong Stock Market Performance: Despite rising geopolitical tensions, both the S&P 500 and Nasdaq Composite closed at record highs, primarily driven by a surge in AI-related stocks, indicating strong market confidence in the technology sector.
- Oil Price Warning: ExxonMobil has warned that oil inventories are on track to reach dangerously low levels in the coming weeks, forcing prices to spike and curbing demand, reflecting market concerns over energy supply.
- Wealthy Investors Pulling Out: According to the UBS Global Family Office Report, 60% of family offices plan to adjust their investment allocations in the next year, with many reducing US holdings and increasing exposure to emerging markets, highlighting a growing trend of 'de-dollarization'.
See More
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- Tesla Robotaxi Expansion: Morgan Stanley reiterates Tesla as equal weight, noting survey checks indicate increased hiring of 'AI Safety Operators' in northern metro areas, suggesting Tesla is gearing up for robotaxi operations expansion, which could enhance future revenues.
- National Health Properties Outlook: Citizens initiates coverage of National Health Properties as outperform, believing the REIT is enhancing organic growth by increasing exposure to Senior Housing Operating Properties, indicating confidence in the senior living market.
- Nvidia Data Center Potential: Bernstein reiterates Nvidia as outperform, highlighting the enormous and still early datacenter opportunity, which is expected to provide significant upside, reflecting optimism in tech stocks.
- Quanta Services Rating Upgrade: Oppenheimer upgrades Quanta Services from perform to outperform with an $800 price target, indicating strong growth potential in the coming years, particularly in adjusted EBITDA expectations.
See More
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- Fast Track Index Inclusion: FedEx Freight is set to join both the S&P 500 and the Dow Jones Transportation Average in early June, replacing EPAM Systems, marking one of the fastest index inclusions for a newly independent firm and highlighting its scale within the North American trucking industry.
- Separation Plan Advances: The FedEx board has formally approved the spin-off of its freight division, which is scheduled to begin trading on the NYSE on June 1, allowing shareholders to receive shares in the new company, potentially enhancing shareholder value significantly.
- Analyst Rating Upgrade: JPMorgan upgraded FedEx's rating from “Neutral” to “Overweight” and raised its price target from $432 to $460, indicating that the current stock setup offers a favorable risk-reward balance as operational changes gain traction.
- Retail Investor Sentiment Shift: On Stocktwits, retail sentiment around FedEx shifted from ‘neutral’ to ‘bullish’, with users noting that the spin-off will allow the company to focus on its
See More
