FedEx Freight Holding Company Inc. (NYSE:FDXF) received renewed support from Bank of America (BofA) following its first earnings report as a standalone company, with the brokerage reiterating its Buy rating and raising its price forecast to $187 from $185.

Analyst Ken Hoexter said the less-than-truckload carrier delivered fiscal fourth-quarter adjusted operating income above expectations, driven by stronger pricing, higher revenue per shipment and increased weight per shipment.

Revenue rose 5% year over year to $2.41 billion, while adjusted operating income reached $363 million, topping the firm’s forecast by $27 million.

Transition Outlook Improves

FedEx Freight also introduced financial targets for its June-to-December 2026 transition period, projecting revenue growth of 4% to 6%, adjusted operating income of $605 million to $645 million, adjusted operating margins of 11.5% to 12.0%, and adjusted earnings of $2.40 to $2.60 per share. Hoexter raised his estimates to reflect the stronger outlook.

The analyst expects earnings growth during the transition period to be driven primarily by pricing, with higher yields expected to add roughly 200 basis points to margins.

Efficiency initiatives are also expected to support profitability, although variable compensation costs, transition service agreement expenses and softer shipment volumes are likely to partially offset those gains.

Margin Expansion Remains Key Thesis

BofA increased its 2027 earnings estimate by about 2% to $5.41 per share and said FedEx Freight’s focus on profitable revenue growth and long-term margin improvement supports a higher valuation.

The firm values the shares at 34.5 times projected 2027 earnings, a slight discount to peers including XPO, Inc. (NYSE:XPO), Old Dominion Freight Line, Inc. (NASDAQ:ODFL) and Saia, Inc. (NASDAQ:SAIA) because the company is still transitioning as an independent business.

Hoexter said management believes the ongoing unwinding of bundled customer contracts poses limited pricing risk because only about 10% of revenue is tied to those agreements and discounts have averaged just 1% to 3%.

Management also identified retail, healthcare, grocery, data centers and small- to medium-sized businesses as key growth markets.

FDXF Stock Price Activity: FedEx Freight shares were down 4.79% at $150.93 at the time of publication on Thursday, according to Benzinga Pro data.

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