By Al Root

FedEx Freight is newly independent, having been spun off from FedEx on June 1. Now Wall Street is weighing in on the largest less-than-truckload carrier in North America.

Less-than-truckload, or LTL, is mainly for industrial customers that don't need a full truck to transport goods over relatively short distances. FedEx Freight competes with the likes of Old Dominion Freight Line and XPO.

The latter two trade for about 40 times earnings expected over the coming 12 months. FedEx Freight trades for about 30 times earnings. (Earnings estimates for the new company are just rolling in.)

That's the opportunity for FedEx Freight shares -- to trade in line with the group that tends to grow earnings consistently at double-digit rates. Wall Street isn't so sure the company is there yet. Analysts want to see improvement before recommending shares.

"FedEx Freight has the potential to deliver meaningful earnings and free cash flow improvement in a demand recovery and outperform peers in a flat environment if management executes a step-change in service levels, " wrote BMO analyst Fadi Chamoun. "However, a transition to a standalone LTL carrier could drive uneven early performance, and establishing execution credibility -- likely required to support higher valuation -- may take time."

He rates shares Hold and has a $140 price target. Truist analyst Lucas Servera has the same rating. His target is $155.

"We could look to become more constructive on shares if management demonstrates a credible path toward profitability levels more consistent with historical peak performance," Servera wrote. "Evidence of stronger network utilization, accelerating industrial demand, or operating margin targets moving closer to prior peak levels would likely support a more favorable risk/reward profile."

He wants to see the improvement before recommending shares. Old Dominion is more profitable. It's expected to generate about $1.5 billion in operating profit on $5.7 billion in sales in 2026. FedEx Freight expects fiscal 2026 sales of $8.7 billion and operating profit of $1.1 billion.

BofA feels better about jumping in early. Analyst Ken Hoexter rates shares Buy and has a $185 price target. He believes that CEO John Smith will drive the change needed to improve margins.

Everyone agrees on what FedEx Freight needs to do -- demonstrate improving operating performance. They just disagree on the timing.

FedEx Freight stock was up 0.3% in premarket trading at $150, while S&P 500 and Dow Jones Industrial Average futures were down 0.3% and 0.5%, respectively.

The shares opened at about $165 on Monday. Some of the selling pressure may have come from FedEx shareholders who didn't want to own the smaller standalone LTL business.

Write to Al Root at allen.root@dowjones.com

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June 02, 2026 10:37 ET (14:37 GMT)

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