The potential spinoff of the freight division will be the focus of FedEx's (FDX.US) Q2 earnings.

Fedex (FDX.US) is set to report its fiscal 2025 Q2 earnings on Thursday, with investors looking for any clues from management regarding a potential spinoff of its freight division.Wall Street expects the package delivery giant to report EPS of $3.94, down 1.3% YoY, while revenue is expected to decline 0.5% YoY to $22.1 billion.Can Long-Term Risks ImproveThe company faces some headwinds as postal service contracts expire. Revenue from its domestic and global priority businesses also declined about 5%.Moreover, President-elect Trump proposed a 10% tariff on all imported goods, with 60% on goods from China.After reporting its Q1 earnings, FedEx said its business would slow in the coming year as customers opted for cheaper shipping services, hurting its priority business. Shares plunged more than 10% on the day after the company issued a bearish earnings guidance, which investors found alarming.Fedex found in the last quarter that more price-sensitive customers were opting for slower, cheaper shipping services, a trend that also hit United Parcel earlier this year. Brie Carere, FedEx's chief customer officer, said on the company's earnings call that domestic shipments in its express division fell 3% due to weak B2B demand.Spinoff BenefitsFedex expects to announce the results of its strategic assessment of its freight division by the end of the year.Stifel believes the likelihood of a spinoff is more than 50% given the widening of the discount to non-union LTL peers (i.e. SOTP is more reasonable).Stifel analyst J.Bruce Chan said: "It's a binary outcome, not factored into our data or Wall Street estimates. But if it happens, we think there could be a lot of upside and could push the stock up by about $100."