UPS (UPS) Stock Rallies 7% on Beat and Raise, Higher Margins Will Help Shares Says Analyst

October 26, 2021 10:27 AM EDT
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Price: $199.90 +2.96%

Rating Summary:
    19 Buy, 15 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 8 | Down: 8 | New: 71
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Shares of UPS (NYSE: UPS) are trading more than 7% higher today after the company delivered better-than-expected Q3 earnings.

UPS reported a Q3 EPS of $2.71 to beat the analyst estimate of $2.54. Revenue for the quarter came in at $23.2 billion versus the consensus estimate of $22.56 billion.

“The actions we are taking under our better not bigger strategic framework to improve revenue quality, enhance productivity and remain disciplined on capital allocation are driving our positive financial performance,” said Carol Tomé, UPS chief executive officer.

The company also raised its FY21 adjusted operating margin target to around 13.0% and expects the adjusted return on invested capital to be roughly 29%.

Goldman Sachs analyst Jordan Alliger maintained a Buy rating and a $237.00 per share price target on the UPS stock post-earnings.

“The numbers above are preliminary based on our existing model. That said, we are encouraged by the performance on domestic profitability - especially around the margin percent which we sense is the key focal point for investors. The ~80 bp beat after deflated expectations going into the quarter should bode well for that shares,” Alliger said in a client note.

Cowen analyst Helane Becker reiterated a Buy rating and a $203.00 per share price target.

“We expect the shares of UPS to be up following the company's better than expected earnings release. As noted, revenue of $23.2 billion exceeded our estimate of $23.0 billion and the consensus estimate of $22.57 billion. Operating income of $2.9 billion increased by 22.6% from 3Q20. We expect the market to react favorably to the company's earnings report and increased full year 2021 guidance,” Becker said in a client note.

Shares of UPS are up over 33% YTD.

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