Evercore ISI Assumes UPS (UPS) at Outperform
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Evercore ISI analyst Jonathan Chappell assumes coverage on UPS (NYSE: UPS) with a Outperform rating and a price target of $227.00.
The analyst comments "Similar to what is unfolding in its recently departed LTL business, UPS’s U.S. Domestic and International parcel businesses are undergoing volume headwinds, some by choice, at the expense of large resets of the pricing and yields that its businesses are generating. We expect little change in 2Q22 results, as volume declines, though at a slightly better rate of change relative to 1Q22, are more than offset by ongoing yield improvements (again, though, at a slowing magnitude) driving mid -single -digit top - and bottom -line growth. What will be most interesting to us, and our fresh set of eyes, is any potential changes to UPS’s thorough guidance ranges owing to a macro backdrop that has undoubtedly softened since the last earnings release in late April, or if the model under new management and its focus on yield/costs can withstand deeper volume headwinds in the coming quarters. The stock has been a relative in -line performer with the broader transport landscape over the last 3 months (better than rails and the broader market, worse than trucking/FDX), so it doesn’t feel like there’s much controversy heading into the print. Only a large guidance reset is likely to surprise and result in greater -than -market volatility over the coming weeks."
Shares of UPS closed at $184.64 yesterday.
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