JP Morgan has published a research report on United Parcel Service UPS after the company increased cash funding that reduces its 2011 pension expense risk, and is now more likely to engage in a large buyback.
In the report, JP Morgan writes "Earlier this week UPS issued $2 billion of notes and within their term sheet they communicated the intention to use the proceeds along with $1.2 billion in cash to make cash contributions to their domestic pension funds. We believe this is a positive move for UPS stock because it largely removes the risk of a pension expense headwind in 2011 and it increases the odds of a large share buyback program in 2011. In this note we provide a framework for looking at the expense impact from the large pension cash contribution UPS plans to make in 2010."
JP Morgan maintains its Overweight rating and $86 price target.
United Parcel Service closed yesterday at $68.07.
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Posted In: Analyst ColorAnalyst RatingsAir Freight & LogisticsIndustrialsJP MorganUnited Parcel Service
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