FedEx Freight reported an 8% increase in revenue to $2.44 billion for the quarter ending in September, surpassing the LSEG consensus of $2.33 billion. Adjusted earnings per share reached $1.49, exceeding the expected $1.36. Following the report, shares rose about 3% in after-hours trading, a positive response after a period of decline since its June spin-off from FedEx Corp.
The company highlighted its ability to negotiate better pricing as a standalone entity, with CEO John Smith noting a successful renewal of 25% of its contracts, which is expected to support future revenue growth. FedEx Freight is also focusing on expanding its salesforce in the less-than-truckload (LTL) market, targeting sectors such as aerospace and retail.
Despite the positive earnings, analysts remain cautious, reducing the price target for FedEx Freight from $175 to $160 due to broader market pressures, including rising fuel prices. The company also reported improvements in shipment reliability and customer service metrics, which could enhance its competitive position during the upcoming shopping season.
Fourth-quarter guidance suggests revenue between $2.30 billion and $2.37 billion, exceeding expectations, and adjusted EPS guidance of 65 to 75 cents also surpasses the consensus estimate of 53 cents