FedEx's structural cost initiatives are delivering, says Barclays' Brandon Oglenski

Core Insights - FedEx is experiencing a positive market response, with shares rising due to strong performance despite a challenging transport environment [1] - The company has successfully delivered margins amidst concerns over declining import volumes driven by US tariffs and regulatory changes [2] - FedEx's structural cost initiatives are yielding results, contributing to its profitability [3] Company Performance - FedEx is on track to spin off its freight business, which, despite a weaker quarter, is expected to deliver best-in-class profitability [3] - The freight business is estimated to be worth nearly half of FedEx's market capitalization [4] - FedEx is benefiting from a generational shift in the market, as UPS faces structural decline due to Amazon taking away volumes [4][5] Competitive Landscape - UPS is struggling to maintain margins and is experiencing rising costs per package, which is advantageous for FedEx [5] - FedEx is gaining market share as it merges its domestic networks to achieve lower costs [5] Revenue Outlook - FedEx forecasts a revenue growth rate of 4 to 6% year-over-year for fiscal 2026, which is higher than market expectations [6] - The company is seeing domestic volume gains, which contributed to the positive surprise in this quarter [6][7] - While international shipments face challenges, FedEx is guiding for revenue growth above market consensus, indicating a strong topline outlook [7][8]