FedEx Corporation Priority Express: Top Themes & Key Questions for F4Q26 Earnings, Upgrading FDX to Overweight

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FedEx Corporation Priority Express: Top Themes & Key Questions for F4Q26 Earnings, Upgrading FDX to Overweight

Brian P. Ossenbeck, CFA AC North America Equity Research

(1-212) 622-1023 27 May 2026 J P M O R G A N

brian.p.ossenbeck@jpmorgan.com

Theme #1: FDX presents attractive risk/reward relative to the rest of the sector

Our updated SOTP implies a valuation of $460 per share (Figure 7), representing

meaningful upside from current levels and supported by what we view as modestly

conservative multiples across both segments. We raised our FY27E EBITDA multiple to

14.0x for Freight, reflecting our view that the spin unlocks considerable value as the

standalone company addresses long-standing limitations in customer-facing technology

and commercial capabilities that have historically weighed on service and yields,

although we note this still represents a modest discount to the 17x average implied by

our FY27E price targets across SAIA, ODFL, and XPO.

On the parcel side, we apply a 9.5x multiple to FY27E FEC EBITDA, which is above

the current ~8x consensus FY27E EBITDA multiple for UPS. We believe this premium

is warranted given FEC's recent margin expansion, share gains in targeted B2B

verticals, and a more visible path to structural improvement through Network 2.0 and

the transformation in Europe. FEC's improving FCF profile and declining capital

intensity also contrast with UPS where lease utilization and receivable factoring have

raised questions around the sustainability of reported free cash flow. We acknowledge

that further multiple expansion requires continued execution on the margin targets,

particularly in the International segment where a 3.6% adj. operating margin leaves

significant room for improvement but also reflects a decade of underperformance in

Europe.