'Steady Stream' Of Positive News Expected From UPS, KeyBanc Says In Upgrade

While United Parcel Service, Inc’s UPS prospects are limited in the near term, favorable commentary on long-term objectives is expected in early 2021, according to KeyBanc Capital Markets.

The UPS Analyst: Todd Fowler upgraded United Parcel Service from Sector Weight to Overweight with an unchanged $190 price target.

The UPS Thesis: New CEO Carol Tomé has a retail background, is “uniquely positioned to understand supply-chain considerations” and is likely reviewing less profitable contracts, Fowler said in the Monday upgrade note.

“We expect a steady cadence of favorable commentary around yield, efficiency, and capital deployment initiatives from new CEO Carol Tomé, which, combined with secular trends supporting domestic package growth, should aid margins and returns,” the analyst said.

The acceleration in domestic package growth on account of shifting consumer habits could moderate in the back half of the year, given more challenging comps and network constraints, he said.

Yet parcels could be “the fastest growth area in domestic transportation, with ample share for all participants,” Fowler said. 

UPS Price Action: Shares of United Parcel Service had spiked by 2.49% to $170.25 at the time of publication Monday.

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