Citi Reiterates Buy Rating, $84 PT On UPS

Citi is reiterating its Buy rating and its $84 price target on United Parcel Service UPS as its lowers its EPS estimates. Says Citi, in its report, “We are lowering our 1Q11 EPS estimate by $0.02 to $0.85 due to cost pressures from sequentially rising fuel prices (we assign $0.08 of impact to this headwind) and severe weather conditions during the quarter. However, we expect strong price improvement to largely offset these temporary cost pressures, which coupled with previous cost initiatives within its Domestic Package business should continue to drive solid operating leverage and earnings growth. For the full year 2011, our EPS estimate falls only one penny to $4.25, as we expect pricing and volume growth in 2Q and 3Q to offset a portion of 1Q weakness. In addition, we are slightly increasing our 2012 and 2013 EPS estimates to $5.03 and $5.75, from $4.95 and $5.65, respectively.” UPS closed at $72.61 yesterday.