Evercore ISI has updated its price target on shares of UPS (NYSE: UPS), lifting it to $141.00 from the previous target of $138.00. The firm has kept an In Line rating on the stock.
The adjustment comes ahead of UPS's third-quarter earnings report, which is set to be released this Thursday morning.
The analyst at Evercore ISI provided insights on the parcel industry, noting stable demand growth in the U.S. Domestic market, although this stability is somewhat counterbalanced by weakening China Exports and International markets.
The forthcoming earnings report is approached with caution due to several factors, including the potential impacts of the East & Gulf Coasts port strike and hurricanes Helene and Milton.
The firm revised its earnings per share (EPS) estimates for UPS, citing slightly softer U.S. Domestic volumes and a more significant revision to International volume growth forecasts. The new projections are $1.58 for the third quarter of 2024, down from $1.60, and $2.57 for the fourth quarter, decreased from $2.74. Additionally, the full-year 2025 EPS estimate has been lowered to $8.81 from $9.20.
In other recent news, United Parcel Service (NYSE:UPS) faces potential headwinds as Barclays downgraded the stock from Equalweight to Underweight due to challenges that could impact earnings and long-term prospects.
The firm cites a competitive domestic US parcel pricing environment and the potential loss of business from Amazon (NASDAQ:AMZN) as key factors. UPS also anticipates additional revenue in Q4 due to the integration of the USPS Priority Mail contract. However, startup costs required to support the contract may pose near-term challenges.
In contrast, Citi maintains a more positive outlook for UPS, initiating coverage with a Buy rating. The firm sees potential for UPS to overcome recent challenges and improve its financial performance, highlighting the company's attractive nearly 5% dividend yield.
In the face of these challenges, UPS continues to expand, recently acquiring German-based Frigo-Trans and its sister company BPL, specialized providers of complex healthcare logistics, to enhance its capabilities in Europe. The company also plans to hire 100,000 seasonal workers for the holiday season, despite an overall expectation of fewer seasonal job additions this year among U.S. companies.
InvestingPro Insights
As UPS prepares to release its third-quarter earnings, InvestingPro data and tips offer additional context to Evercore ISI's analysis. UPS currently has a market capitalization of $112.49 billion and trades at a P/E ratio of 21.47. The company's revenue for the last twelve months as of Q2 2024 stood at $89.5 billion, with a revenue growth of -6.94% over the same period.
InvestingPro Tips highlight that UPS has raised its dividend for 14 consecutive years and maintained dividend payments for 26 consecutive years. This consistent dividend history, coupled with a current dividend yield of 4.96%, may appeal to income-focused investors despite the challenging market conditions noted in the Evercore ISI report.
The company's stock is currently trading near its 52-week low, which aligns with the cautious outlook presented in the article. However, UPS remains a prominent player in the Air Freight & Logistics industry, and analysts predict the company will be profitable this year.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into UPS's financial health and market position.
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