J.P. Morgan Maintains Estimates On UPS In 1Q Preview

J.P. Morgan is maintaining its estimates on United Parcel Service UPS as it previews its 1Q11 numbers, to be released 4/26. Says J.P. Morgan, in the report, “We are maintaining our $0.81 EPS estimate for 1Q, but we believe it is possible for UPS to report (on Tuesday, April 26) EPS between our estimate and the Street consensus estimate of $0.85. The reason for maintaining our EPS estimate even though we think EPS could be higher is that we believe we have good visibility to volume, pricing, and fuel cost, but there is relatively less visibility to compensation/productivity which could drive upside to our EPS estimate. Separate from the actual performance in 1Q, management guidance is important; but there is currently about a $0.03-0.04 headwind to our 2Q EPS estimate of $1.02 (versus Street Consensus of $1.03) from the impact of rising fuel prices, so we think guidance may be restrained by this. Still, we expect positive comments on price and volume trends on the conference call, which should facilitate a constructive response from the stock.” J.P. Morgan also maintains its Overweight rating and price target of $86. UPS closed yesterday at $71.98.