UPS stock is now a Buy despite recession fears: analyst – Yahoo Finance

Date:

- Advertisement -

It's time to back up the truck on UPS stock, according to Deutsche Bank analyst Amit Mehrotra.
Mehrotra upgraded shares of the logistics giant. The stock rose more than 1% in premarket trading.
"It's easy to be neutral or negative on UPS in the current environment, but in our experience that's exactly the time to get more positive, especially under the stewardship of the current management team," Mehrotra wrote in a note to clients published Tuesday.
He added: "Recall, we downgraded UPS shares to hold this time last year, when we said that changing macro conditions and the upcoming labor contract negotiation were greater concerns to us in the context of a more than doubling of equity value since the start of the pandemic. While contrarian at the time, we believe those concerns are now fully reflected in shares and widely held by market participants."
Here are the details behind Deutsche Bank's upgrade:
Rating: Buy (upgrade from hold)
Price Target: $220 (up from $197)
2023 EPS Estimate: $13.39 (10% above current analyst consensus)
"We think market participants are overly focused on volume growth and not on mix and productivity initiatives, which we think can drive positive revenue growth and solid contribution margins despite modestly lower domestic volumes. Over the mid term, we think the upcoming teamsters contract negotiation will be more benign than expected, which partly reflects the signifiant cost of living adjustments (COLA) and market rate adjustments (MRAs) made to the current wage structure (UPS's strong results in the third quarter and second half 2022 estimate is despite $600 million of incremental union wage and benefit costs). We also see potential for negotiations to yield opportunity for UPS to gain additional market share via time in transit."
"We are also emboldened by impressive operating performance and potential for further productivity. It's no small feat, for example, to expand margins in a highly capital intensive business when volumes are down and costs are accelerating, which is what UPS did in the last three quarters. And, there appear to be numerous levers to allow consistent positive operating leverage. The company recently noted that just a ten minute improvement within its integrated network is worth $257 million to the bottom line (25 basis points of consolidated margin), which speaks to the opportunity afforded by the company's scale. We are also intrigued by the company's comments around attacking density challenges… which focus on temporarily holding orders at the first mile until better density can be achieved on the last mile (while still meeting customer service commitments). This can drive a 90% reduction in last mile unit costs (from $5.50 per package to 60 cents)."
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
Click here for the latest trending stock tickers of the Yahoo Finance platform
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
Download the Yahoo Finance app for Apple or Android
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube
Related Quotes
Americold Realty Trust Inc. (COLD) might move higher on growing optimism about its earnings prospects, which is reflected by its upgrade to a Zacks Rank #2 (Buy).
Yahoo Finance Live anchors discuss Deutsche Bank’s Buy rating on UPS.
With a median price-to-earnings (or "P/E") ratio of close to 15x in the United States, you could be forgiven for…
(Bloomberg) — The head of performing credit for one of the world’s largest distressed debt firms, Oaktree Capital Management, says there are pockets of opportunity in junk bonds for investors willing to look past more volatility and wider credit spreads in 2023.Most Read from BloombergApple to Lose 6 Million iPhone Pros From Tumult at China PlantNext Covid-19 Strain May be More Dangerous, Lab Study ShowsStocks Hit by Fedspeak as China Woes Boost Havens: Markets WrapThere’s a Job-Market Riddle a
The Swiss packaged-foods giant NSRGY CH:NESN said it now expects sales to grow organically between 8% and 8.5% from previous expectations of around 8%. The underlying trading operating profit margin is still seen at around 17%.
NetApp Inc. is scheduled to report its latest top- and bottom-line numbers to shareholders after the close of trading Tuesday. Prices made lows in early July and again in October but the rally into November has so far failed to break above the August highs to complete a double bottom pattern. Trading volume has declined on the October-November rally and that is not a positive development.
(Bloomberg) — Apple Inc. has shelled out more than $550 billion buying back its own shares over the past decade, more than any other US company, and the technology juggernaut shows no signs of slowing down. Most Read from BloombergApple to Lose 6 Million iPhone Pros From Tumult at China PlantExpats Rank the Best and Worst Cities to Live and WorkScientists Revive 48,500-Year-Old ‘Zombie Virus’ Buried in IceThis Is Where Luxury Property Prices May Rise and Fall the Most in 2023Even with the stock
(Bloomberg Markets) — India’s newest financial hub is rising from scrubland near the banks of the Sabarmati River once dominated by marsh birds and grazing buffalo.Most Read from BloombergApple to Lose 6 Million iPhone Pros From Tumult at China PlantNext Covid-19 Strain May be More Dangerous, Lab Study ShowsMusk Threatens War With Apple, Jeopardizing Vital RelationshipStocks Hit by Fedspeak as China Woes Boost Havens: Markets WrapIn the state of Gujarat, just a few glass-fronted towers greet th
(Bloomberg) — Stocks fell, with some of the world’s largest technology companies leading losses as Treasury yields climbed.Most Read from BloombergApple to Lose 6 Million iPhone Pros From Tumult at China PlantExpats Rank the Best and Worst Cities to Live and WorkScientists Revive 48,500-Year-Old ‘Zombie Virus’ Buried in IceThis Is Where Luxury Property Prices May Rise and Fall the Most in 2023The S&P 500 was down for a third day, while the tech-heavy Nasdaq 100 underperformed amid a slide in gi
Kanye said he was unable to use his Apple Pay the other night.
FDX, IMAX and LPX have been added to the Zacks Rank #5 (Strong Sell) List on November 29, 2022.
(Bloomberg) — The fallout from the collapse of Sam Bankman-Fried’s FTX crypto empire has spread to a new corner of the digital-asset market.Most Read from BloombergApple to Lose 6 Million iPhone Pros From Tumult at China PlantExpats Rank the Best and Worst Cities to Live and WorkScientists Revive 48,500-Year-Old ‘Zombie Virus’ Buried in IceThis Is Where Luxury Property Prices May Rise and Fall the Most in 2023Traders’ focus has turned to the price disparity between Bitcoin and a derivative of t
Yahoo Finance Live anchors discuss the trading volume for World Cup crypto coins.
There were some distinct winners and losers to kick off the holiday shopping season.
What to watch in markets on Tuesday, November 29, 2022.
Yahoo Finance Live anchors discuss Merriam-Webster's word of the year.
Investors may be reacting to positive short-term news, but a longer-term development also provided them with a boost of confidence.
Investors looking for a guiding hand to steer them safely through the current hazardous stock market landscape could do worse than listen to what billionaire Ken Fisher has to say. The Fisher Investments founder famously started his independent money management firm with $250 in 1979, a company that is now a $197-plus billion going concern, while Fisher’s own net worth stands north of $5 billion. So, for those getting restless from 2022’s unrelenting bear, Fisher has some very simple advice: "Th
The post-COVID slowdown hasn't been kind to Amazon (NASDAQ: AMZN), and the stock is down 45% so far this year. While the company's e-commerce operations are experiencing weak growth and margins, Amazon is much more than just an online retailer. Amazon's third-quarter results were a mixed bag.
Cathie Wood and Warren Buffett have extremely different approaches when it comes to investing. While Wood tends to invest in high-flying growth stocks, Buffett is usually seen as a value investor who also loves companies that return capital to shareholders. Buffett has said in the past that he wouldn't buy all of the Bitcoin in the world for $25.

source

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Share post:

Subscribe

ADVERTISEMENT

Popular

More like this
Related

IMF predicts global public debt will be at 93% of GDP by end of 2024

Global public debt will exceed US$100 trillion by the...

World Bank’s Banga says more bilateral debt forgiveness needed

World Bank President Ajay Banga said on Thursday (17...

Ghana, creditor panel agree on debt restructuring, paving way for IMF cash

Ghana has finalised a pact with its official creditor...

Nigeria strikes deal with Shell to supply $3.8 billion methanol project

Nigeria has struck a deal for Shell (SHEL.L), opens new...