FedEx shares surged in premarket trading Friday after the parcel giant beat estimates for quarterly profit and reported a higher operating margin at Express, its largest unit.

Shares of the company rose 12.4% to $297.75 before the bell, with rival UPS up 3.5%.

FedEx has taken several measures to protect margins at Express, including parking aircraft, reducing flight hours and efforts to fly fewer jets, with better capacity utilization.

The Memphis, Tennessee-based company also said on Thursday it plans to buy back $500 million worth of its shares in the current quarter, with its board approving a new $5-billion share repurchase program.

Operating margin at its Express overnight-delivery provider rose 2.5% in the February fiscal quarter, from 1.2% a year ago.

"FedEx hit all the high notes this time with lower capex, a reloaded buyback program and a beat in Express off low expectations," J.P.Morgan analysts said in a note.

The firm also tightened its annual profit forecast and now expects earnings in the range of $17.25 to $18.25 per share, compared to its prior forecast of $17 to $18.50 per share.

Adjusted profit for the quarter ended Feb. 29 rose to $966 million, or $3.86 per share, topping analysts' average estimate by 41 cents per share, according to LSEG data.

"FedEx delivered better margin performance at Express despite the challenging revenue/demand backdrop," Baird analysts said, calling the company's quarterly performance "one shining moment relative to lower expectations."

Investors have been urging FedEx CEO Raj Subramaniam to enhance profitability in the air-based Express segment amid contract renewal negotiations with USPS and ongoing labor discussions with its pilots.

Shares of FedEx trade at 12.72 times forward profit estimates, below rival UPS's 18.01 multiple.