Bernstein SocGen Group Prefers UPS (UPS) Over FDX Heading Into 2025; PT Raised to $179

Bernstein SocGen Group analyst David Vernon raised the price target on UPS (NYSE: UPS) to $179.00 (from $172.00) while maintaining a Outperform rating.

The analyst said: "Parcel & Airfreight ended the year underperforming the S&P500 on a YTD basis as both struggled with the negative impacts of delayed Fed cuts and moved through a freight recession in 2024. As we head into the new year, we remain optimistic that the industry set up is more favorable than it was in 2024.

We like UPS here as they have the best visibility to unit cost inflation. With less margin drag from the labor contract and mix, we expect pricing actions to drop more quickly to the bottom line and believe that by this time next year the company's target of a better than 12% margin will look more realistic than it does today supporting a higher multiple and positive earnings revisions.

We reach our one-year PT of $179 (previously $172) by using a 15.5x (previously 16x) multiple on NTM+1 adj. EPS of $11.53 (previously $10.75). We maintain our Outperform rating.

We are waiting for a better entry point with MarketPerform rated FDX."

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