FedEx Corp.'s (FDX) quest to spend its way to stronger growth and better margins likely won't end this year, according to Barclays.

Amid attractive U.S. tax incentives, robust e-commerce, airfreight market opportunities and "a refocused competitor in UPS  (UPS) ," Barclays analyst Brandon Oglenski expects FedEx management to raise its capital spending outlook later this month.

"While bullish investors could initially be disappointed by another extended period of low cash conversion, we suspect a strong revenue outlook coupled with guidance for margin improvement should assuage many long-term fears," Oglenski wrote in a March 5 research note.

Oglenski mentioned that management has signaled a willingness to increase global Express network spending.

FedEx Executive Chairman and Chief Executive Frederick Smith said during a conference call with analysts in December that the Memphis, Tenn.-based company remains on target to improve operating income at the FedEx Express segment by $1.2 billion to $1.5 billion in fiscal 2020, compared to fiscal 2017.

"I would just add that we are convinced that the additional spending is going to generate results well beyond the $1.2 billion to $1.5 billion in the marketplace," David Cunningham, CEO of FedEx Express, said during the conference call.

For many years, FedEx has spent its way to stronger growth compared to rival UPS, the Barclays analyst noted.

This year, however, UPS spending may exceed that of FedEx in 2018, Oglenski said.

"We think FedEx management will be disinclined to risk losing momentum by foregoing investment given 80% cumulative revenue outgrowth and 470 [basis points] closure of the margin gap to UPS since 2000," wrote Oglenski.

The analyst anticipates that incremental investments in FedEx's Express unit will likely drive capital expenditures above $6 billion for the next few years.

Still, with "absolutely cheap valuation and strong earnings outlook," FedEx is Barclays' top pick within transports. The firm has an overweight rating on the stock with a $310 price target.

Shares of FedEx held relatively flat at $241.28 at 11:30 a.m. EST Monday.

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