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FedEx Stock Surged in a Volatile Week

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FedEx investors were encouraged by the company’s shareholder-friendly moves in response to activist pressure.

Luke Sharrett/Bloomberg

FedEx stock got a much-need jolt this week, and investors may soon hear more good news.

Shares of the logistics giant surged during the depths of the pandemic, but slumped in 2022 as FedEx (ticker: FDX) contends with higher costs and a slowing economy. But that downward trend reversed on Tuesday when FedEx announced that it was lifting its dividend by 53% and adding three new directors to its board as part of an agreement with activist hedge fund D.E. Shaw. In the past week’s volatile market, FedEx stock still managed an 11% gain.

Dividend hikes aren’t usually enough to excite shareholders. But the prospect of activist pressure was enticing to investors, as FedEx has historically traded at a discount to rival United Parcel Service (UPS). FedEx also said that it was changing its executive-compensation plan to better align with total shareholder returns.

Analysts were generally bullish on FedEx’s announcements.

“It will take time to build credibility for improving execution, especially as the industry’s pricing power slips, but the new oversight and compensation should be a good start,” J.P. Morgan analyst Brian Ossenbeck wrote in a note on Wednesday. He reiterated an Overweight rating on FedEx stock but trimmed his price target by $3 to $279.

FedEx will have two more chances to win over shareholders this month. It reports fiscal-fourth-quarter earnings on Thursday, and the company will host a two-day investor and analyst event the following week.

Write to Carleton English at carleton.english@dowjones.com