FedEx's (FDX) spinoff of its freight business and transition to calendar year reporting will create some near-term noise but should improve structural profitability and cash flow in the longer term, UBS analysts said in a Wednesday note.

The spinoff and reporting transition make it difficult to analyze its 2026 adjusted earnings per share guidance of between $16.90 and $18.10, analysts said.

Analysts said that the company's capital spending is expected to remain disciplined at roughly 4% of revenue, supporting strong free cash flow generation.

UBS said that FedEx's volume and revenue growth could be important to leveraging gains in cost structure.

UBS retained a buy rating on the stock, but lowered its price target to $350 from $445.

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