UPS' Risks Building Into 2023 Prompt 32% Price Target Cut By This Analyst

Morgan Stanley analyst Ravi Shanker reiterated an Underweight rating on the shares of United Parcel Service Inc UPS and lowered the price target to $100 (39% downside) from $148.
The analyst thinks UPS' normalized EPS would be $8 - $9 versus $10 before and compared to the pre-pandemic level of $7.50.
In addition, significant idiosyncratic risk from the Amazon.Com, Inc. AMZN business potentially going from 'Glide Down, to 'Glide Out' in 2023 and union contract renegotiations could push the normalized EPS even lower, added Shanker.
The analyst does not expect the company to miss the upcoming Q3 FY22 earnings by anywhere close to the magnitude of that of FedEx Corp FDX.
Related: Post-Pandemic Unwind? 4 FedEx Analysts Talk Pre-Earnings Miss
The analyst attributed the reduction of estimates and price target to increased post-pandemic mean reversion risk, AMZN insourcing and competitive risk in 2023, as well as union contract negotiation risk in 2023.
Price Action: UPS shares are trading higher by 1.36% at $163.74 on the last check Monday.

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