Spin-offs are a great tool for businesses, helping them rationalize ongoing business, focus on growth, and unlock shareholder value. The key question is whether a separation changes how investors might evaluate the original company, the new company, or both as standalone stories.
FedEx on Track to Deliver Value-Building Savings
FedEx’s (NYSE: FDX) spin suggests both the original and new companies are buyable. The spin-off separates the freight business from the core package delivery business, enabling both companies to trade at freer valuations. The critical takeaway for potential investors in the freight company is that it may trade at a 50% or higher premium to the original. The hurdle for the freight business is 2026 headwinds, including tepid demand, margin pressure, and expansion costs.
Takeaways for investors in the original FDX include improvements in operational quality, cash flow, and the reliability of capital returns. FedEx’s capital return is significant, comprising dividends, dividend growth, and aggressive share buybacks. Buybacks reduced the count by more than 2.5% year-to-date as of the end of fiscal Q3 2026. Analysts are lifting price targets ahead of the split, indicating a Moderate Buy with potential to hit new highs by mid-year.
KBR Split Enhances Focus, Unlocks Growth Avenues
KBR’s (NYSE: KBR) split and spin-off, scheduled for completion in the back half of 2026, aims to separate its Sustainable Technology Solutions business from its government business. The new company will comprise the Mission Technology Solutions group, which includes defense, security, and space applications. Among the reasons for this spin is the unlocking of value; the spinco may experience a 100% to 200% price gain based on the original’s 9X multiple. Defense specialists such as Lockheed Martin (NYSE: LMT), Northrop Grumman (NYSE: NOC), and RTX (NYSE: RTX) trade at well over 20 times earnings.
While the spinco will focus on defense contracts and execution of its massive backlog, the ongoing business will focus on higher margin sustainable energy technologies. The leaner company will benefit from speedier decision-making and financial flexibility, enabling it to continue investing in its future. Analyst revisions are mixed in 2026, but the trend is stable, leaving the rating at Hold and the consensus price target forecasting about a 50% upside.
Medtronic to Spin-Off High-Growth Diabetes Unit
Medtronic (NYSE: MDT) plans to spin off its high-growth diabetes unit later this year, a move that, at face value, seems counterintuitive. However, the diabetic unit is a consumer-oriented business while the core is business-to-hospital, presenting challenges for the combined company. The result will be a pure-play diabetic equipment and supply company, able to compete effectively in its high-growth market, and with the potential for takeover.
The remaining company will focus on high-growth, higher-margin businesses such as cardiovascular and robotic surgery. Robotic surgery is the future of medicine, with leaders such as Intuitive Surgical (NASDAQ: ISRG) sustaining double-digit growth rates and steadily improving operational quality. Twenty-six analysts rate this stock as a Moderate Buy, coverage is increasing, the sentiment is firm, and the consensus price target forecasts more than 25% upside as of late March.
Keurig Dr Pepper: Grows to Split, Unleashes Global Powerhouses
Keurig Dr Pepper (NASDAQ: KDP) has struggled for years as strengths and weaknesses in the soda business offset strengths and weaknesses in the coffee business. Now, the company plans to make another coffee acquisition, then spin the coffee bundle into a pure-play for investors. The combined business will experience supply chain efficiencies and unlock growth opportunities, specifically in the high-margin coffee pod industry.
The ongoing business will be a soda-and-beverage pureplay, unencumbered by coffee-specific issues, with an enhanced financial profile. It will be able to focus on its higher-margin businesses and growth, including acquisitions, and is expected to be completed in April. Analysts are bullish on this stock, rating it a Moderate Buy and raising price targets ahead of the spin-off. The consensus price target reported by MarketBeat forecasts close to 35% upside, while the high-end of price targets adds double digits.
Honeywell Splits to Enhance Focus With 2 Pureplay Businesses
Honeywell (NASDAQ: HON) aims to split its aerospace business into a more focused pure-play unit. It will service defense and commercial contracts, execute on a record backlog, and improve cash flow while the original business focuses on industrial automation. Industrial automation is the linchpin of the Industrial Revolution 4.0 and the nexus of Internet of Things (IoT), robotics, and AI. The spin allows it a more flexible financial position, enabling strategic acquisitions to sustain growth long-term.
Analyst trends suggest the group is most bullish on this stock. MarketBeat’s data reflects swelling coverage, firming sentiment pegged at Moderate Buy, and an uptrend in the price targets. Consensus forecasts call for a 10% upside in late March, and the trends point to the high end and are likely to remain strong through year-end.