Why UPS Stock Is in the Fast Lane Today


13b309bf6d36065d8e455dac911c0619

A well-regarded analyst is warming up to United Parcel Service (NYSE: UPS), and investors are taking notice. Shares of the transportation giant were up 4% as of 11 a.m. ET after UBS upgraded the stock from neutral to buy.

Calling a bottom on UPS shares

Shipping is a cyclical business, and UPS investors over the past year have gained first-hand experience of what a down cycle feels like. The company’s shares have fallen nearly 30% in the last 12 months due to declining volumes and higher costs.

UPS failed to deliver for investors in the fourth quarter and provided disappointing guidance for 2024. The company also announced a new cost-cutting campaign, including job cuts, aimed at saving about $1 billion annually. It could also seek a buyer for some of its weaker-performing business lines.

Thomas Wadewitz, an analyst at UBS, has seen enough. On Tuesday morning, Wadewitz upgraded UPS shares to buy and raised his price target from $160 to $175.

The analyst wrote that UPS’ recently announced cost reduction program should support margin expansion and “attractive” earnings growth. He expects Wall Street to warm to the stock following an upcoming analyst meeting, where management is expected to lay out its plans for the future.

Is now the time to buy UPS shares?

UPS’s core business is highly cyclical, and there isn’t much the company can do to escape that reality. Its financial results are going to be better when the economy is strong and demand for shipping services is robust.

UPS can’t create additional demand for its services. The best it can do is manage through the weak periods. With the shares down big in 2023 and UPS moving to cut costs, there is reason to hope that the stock can begin an upward climb from here.

Should you invest $1,000 in United Parcel Service right now?

Before you buy stock in United Parcel Service, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and United Parcel Service wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.

See the 10 stocks

*Stock Advisor returns as of February 5, 2024

Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool recommends United Parcel Service. The Motley Fool has a disclosure policy.

Why UPS Stock Is in the Fast Lane Today was originally published by The Motley Fool



Source link

About The Author

Scroll to Top