With FedEx ( FDX) set to report earnings on Thursday, analyst Helene Becker has upgraded the shares on the theory that "freight is indeed bottoming."

In a report on Tuesday, the Jesup & Lamont analyst said she upgraded FedEx to buy from hold. Becker said she believes that either "business is improving or business is bottoming -- not getting better, not getting worse."

Becker said business was weak in January and February but that "there is significant upside potential as worldwide economies improve." Her target price is $54. FedEx shares were trading midday Tuesday at $41.07, up 91 cents.

Analysts surveyed by Thomson Reuters estimate that FedEx will report earnings of 46 cents a share for the fiscal third quarter, compared with $1.26 for the same quarter a year earlier.

Last week, Standard & Poor's reiterated a buy on FedEx, saying its 12-month target price is $44 and its per-share estimate for the fiscal year ending in May is $4. (Consensus is $3.97.)

"Volumes and pricing are likely to have worsened in the first two months of 09," wrote S&P analyst Jim Corridore. Nevertheless, he said, "We think FDX is well-positioned for revenue and EPS growth once the economy starts to improve."

Also last week, Moody's Investors Service lowered its long-term debt rating on FedEx competitor UPS ( UPS), saying the economy will remain weak this year. Moody's dropped UPS one notch to Aa3, from Aa2.

However, Moody's said UPS will be an early beneficiary when the economy begins to recover.