Buy Rating on UPS: Cyclical Rebound and E-commerce Driving Growth

Goldman Sachs analyst Jordan Alliger has reiterated their bullish stance on UPS stock, giving a Buy rating today.

Jordan Alliger has given his Buy rating due to a combination of factors that suggest a favorable outlook for United Parcel Service Inc. (UPS). Despite recent adjustments to earnings estimates based on softer business-to-business (B2B) parcel volumes, Alliger maintains a positive view on the broader parcel delivery sector. His assessment is grounded in the belief that the industry is nearing a cyclical low point in parcel volumes and margins. This suggests that any future increase in parcel volumes, coupled with a deceleration in wage growth expected later in 2024, could significantly improve package density, thereby lowering costs per package and enhancing UPS’s margin potential.
Alliger’s optimism also extends to the secular growth opportunities presented by the e-commerce sector, which continues to drive demand for parcel delivery services. He looks forward to UPS’s upcoming analyst day, where he anticipates that the company will outline its long-term strategic goals, execution targets, revenue opportunities, and capital expenditure plans. This event is seen as a potential catalyst for the stock, providing further clarity on UPS’s strategies to capitalize on these growth opportunities and improve its financial performance.

Alliger covers the Industrials sector, focusing on stocks such as JB Hunt, TFI International, and XPO. According to TipRanks, Alliger has an average return of 11.0% and a 59.06% success rate on recommended stocks.

In another report released today, Bernstein also maintained a Buy rating on the stock with a $182.00 price target.

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United Parcel (UPS) Company Description:

Founded in 1907, Georgia-based United Parcel Service, Inc. is the world’s largest package delivery company and a leading provider of global supply chain management solutions. The company also operates one of the largest airlines in the world and has the world’s largest fleet of alternative-powered vehicles. The company operates through three segments: U.S. Domestic Package, International Package, and Supply Chain and Freight.