UBS has lifted its price target for FedEx (NYSE:FDX) to $412.00 from $314.00 while maintaining a Buy rating, signaling the bank's expectation that a combination of pricing improvements and tighter cost controls will drive meaningful upside for the freight and parcel delivery company. The new target sits well above FedEx's then-current share price of $363.02, which the firm noted was trading near its 52-week high.
UBS's decision to raise the target reflects an outlook that the company can extract greater benefit from pricing initiatives while also reducing its cost base. That view is framed against a valuation that, per InvestingPro data cited by the source, shows FedEx trading at a P/E of 20.01 - a level the note describes as relatively high when weighed against near-term earnings growth expectations.
Central to UBS's optimism is the expectation that FedEx will deliver multi-year financial targets that chart a clear path back toward its historical operating margin benchmark of 10%. UBS's model currently projects an operating margin of 7.2% for fiscal 2026, and the bank anticipates that management's multi-year guidance will point to improvement beyond that estimate.
UBS also flagged the company's Network 2.0 program as an important driver of potential margin upside. The bank expects an update to the program with the likelihood that the cost-reduction goal will exceed the current $2.0 billion target. UBS sees the program and additional initiatives as contributors to a structurally lower cost profile and incrementally stronger operating margins over time.
While UBS highlighted the share-price appreciation FedEx has experienced in recent months, the bank still views the multi-year targets as evidence of substantial remaining upside, if management meets or beats the margin and cost-control expectations laid out in its guidance.
Separately, FedEx's finance and operational moves underscore management activity ahead of strategic milestones. A FedEx subsidiary, FedEx Freight Holding Company, priced a $3.7 billion private offering of senior notes - a financing step tied to the planned spinoff of the freight business. In operations, the company is working with Boeing and the FAA to return its grounded MD-11 freighter jets to service by the end of the current fiscal quarter, subject to completion of the necessary inspections and maintenance.
On the product and customer-experience front, FedEx introduced FedEx Tracking+ and FedEx Returns+, tools developed with parcelLab that incorporate AI to automate delivery inquiries and refine returns policies, aiming to enhance post-purchase experiences for merchants.
Analyst sentiment has shifted positive elsewhere as well: Bernstein SocGen Group upgraded the stock from Market Perform to Outperform, with analyst David Vernon raising the price target to $427.00. Bernstein's note indicates confidence that margin improvement could push shares above $400 in the near- to medium-term under its valuation approach.
Taken together, the analyst upgrades, the financing for the freight spinoff, the planned return to service of MD-11 aircraft, and the rollout of AI-enabled customer tools highlight a suite of strategic actions that market participants and analysts point to as drivers of improved financial performance, if management can execute on the plans outlined.