©Reuters. UPS (UPS) Gains as UBS Raises Shares to Buy
UPS (UPS) shares rose more than 4% on Tuesday after UBS upgraded the stock to Buy from Neutral, raising its price target to $175 from $160 per share.
UBS analysts told investors that UPS is a “cost narrative” and that expectations for the company are currently low.
“We expect management to deliver a strong cost reduction program to support margin expansion and attractive EPS growth, despite facing a modest revenue growth environment,” UBS analysts said .
“We expect UPS’ March 26 analyst meeting to provide greater visibility into cost savings and act as a catalyst for stronger valuations,” they added.
The significant downward movement in UPS shares is in response to their 4Q report and EPS guidance, which suggests that investor expectations reflect a low level,” according to UBS.
“We also believe investors may be skeptical of UPS’s ability to deliver stronger performance in 2H24 and achieve margin performance above 10% in 4Q24,” UBS analysts commented. “Instead, we expect UPS to deliver strong cost reductions, which would provide support for 2H24 domestic package margin growth and margin performance above 10% in 2025E.
UBS forecasts an internal margin of 10.4% for UPS in 2025, a key factor supporting the bank’s forecast of $10.30 per share.