Deutsche Bank-upgraded the rating of United Parcel Service
2022.11.29 09:40
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Deutsche Bank-upgraded the rating of United Parcel Service
Budrignnews.com – The stock of United Parcel Service (NYSE:) was upped by Deutsche Bank.to Buy from Hold with a $220 per share price target, up from $197.Consequently, UPS shares are up nearly 2% in pre-open Tuesday trading.
The upgrade decision comes just a few months after analysts stopped covering UPS stock because of changing macro conditions.Since these worries are “now fully reflected in shares and widely held by market participants,” a return to a Buy rating is possible.
In a note, analysts stated that “it’s easy to be neutral or negative on UPS in the current environment, but in our experience that’s exactly the time to get more positive, especially under the stewardship of the current management team.”
The analyst advised investors to concentrate on UPS’ mix and productivity initiatives, which can “drive positive revenue growth and solid contribution margins despite modestly lower domestic volumes,” rather than volume growth.
UPS has a lot of room for growth in terms of productivity and operational efficiency, according to the analysts. The management team of the business recently stated that the bottom line would benefit by $257 million from just a 10-minute improvement within its integrated network.
“We are also intrigued by the company’s comments regarding addressing density challenges, which focus on temporarily holding orders at the first mile until better density can be achieved on the final mile (while still meeting commitments to customer service). Last mile unit costs can drop by 90% (from $5.50 per package to 60c) as a result of this, they said.
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