Why This UPS Analyst Is Bullish For The First Time In 5 Years

United Parcel Service, Inc. UPS is likely to generate high-teens earnings growth in 2021 and 2022, according to Credit Suisse.

The United Parcel Service Analyst: Allison Landry upgraded United Parcel Service from Neutral to Outperform and raised the price target from $147 to $192.

The United Parcel Service Takeaways: UPS now has “a clear path for meaningful margin improvement” in its domestic business, given the significant increase in pricing power of carriers and structural cost reductions, Landry said in the Monday upgrade note.

Capital expenditure is likely to “begin its descent from a multi-year high, with further and potentially significant opportunities to reduce capital intensity,” the analyst said. 

UPS is “now being led by a change agent with a proven track record of executing on cost performance, efficiency gains, capital discipline, and improved returns,” she said. 

Even modest improvement in revenue quality, cost and capital efficiency “is enough to warrant sufficient earnings and ROIC potential upside to justify an Outperform rating,” according to Credit Suisse. 

UPS Price Action: Shares of United Parcel Service were down 0.92% at $158.19 at last check Monday. 

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