UPS Q3 Earnings Preview: Delivery Giant Aims To End Revenue Misses As Stock Remains 'Stuck In A Two-Year Downtrend'

Package delivery company United Parcel Services, Inc. UPS could provide a look at how it fares with competitor FedEx Corp FDX when the company reports third-quarter financial results before market open Thursday.

Earnings Estimates: Analysts expect UPS to report third-quarter revenue of $22.14 billion, up from $21.06 billion in last year's third quarter, according to data from Benzinga Pro.

UPS missed revenue estimates from analysts in eight straight quarters. Before the streak of misses, UPS previously beat analyst revenue estimates in 10 straight quarters.

Analysts expect UPS to report third-quarter earnings per share of $1.63, up from last year's $1.57 in the third quarter. The company missed analyst estimates in the second quarter but has beaten estimates in three of the past five quarters with the other quarter meeting expectations.

UPS has beaten analyst estimates in seven of the past 10 quarters with two misses and one in-line figure.

Read Also: Sluggish Freight Demand Affected United Parcel’s Q2 Earnings: Goldman Sachs

What Experts Are Saying: United Parcel Services has faced headwinds with labor negotiations and softer shipping volumes, Freedom Capital Markets Chief Global Strategist Jay Woods said in a weekly newsletter.

"UPS has been mired in a two-year downtrend and hopefully this quarterly report is what finally changes that narrative," Woods said.

Woods said that FedEx reporting before UPS and citing softer shipping volumes doesn't help UPS ahead of the earnings report.

Looking at the UPS stock price, Woods said to watch the 200-day moving average.

"That has acted as major resistance consistently over this time period. Shares continue to make lower highs on each rally. That is the standard definition of a textbook downtrend which UPS clearly is experiencing."

Woods said the $124 August lows are the key figure to watch the stock to hold if there is a negative reaction.

"Not creating a new low may be a little win for shareholders if tough times continue."

UPS stock breaking above the 200-day moving average could be the start of a "prolonged upswing," Woods said.

Here are recent analyst ratings on UPS and their price targets:

• Evercore ISI: Maintained In-Line rating, raised price target from $138 to $141
• Barclays: Downgraded from Equal-Weight to Underweight with $120 price target
• Wells Fargo: Maintained Overweight rating, raised price target from $134 to $142
• Goldman Sachs: Maintained Buy rating, lowered price target from $165 to $162
• Citigroup: Initiated with Buy rating and $162 price target

Key Items to Watch: UPS's updated guidance calls for full-year revenue of around $93 billion. Analysts and investors will be looking forward to an update on this figure from the company.

FedEx stock fell after the earnings report and has slightly recovered, but failed to return to the pre-quarterly earnings levels.

While FedEx shares remain up 6.2% year-to-date in 2024, UPS stock is trading negative on the year.

Another area to watch in UPS's report could be about mergers and acquisitions and any commentary on future deals. The company announced the acquisition of Mexican express delivery company Estafeta earlier this year. An update on that acquisition could also be an item for investors to watch.

UPS Price Action: UPS stock is trading flat at $131.42 on Wednesday versus a 52-week trading range of $123.12 to $163.82. UPS stock is down 17% year-to-date.

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