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Atlanta, Georgia-based United Parcel Service, Inc. (UPS) is a major player in package delivery and supply chain management services. Valued at a market cap of $112.7 billion, the company offers a broad range of logistics solutions, including domestic and international package delivery, freight forwarding, and supply chain consulting. UPS is known for its extensive network and innovative logistics capabilities, ensuring reliable and efficient service to businesses and consumers worldwide.
Shares of the parcel delivery company have dropped 12.9% over the past 52 weeks, underperforming the broader S&P 500 Index ($SPX), which rallied nearly 31.1%. In 2024, UPS shares are down 16.5% on a YTD basis, lagging behind the SPX's 24.7% gain.
Narrowing the focus, UPS is underperforming the ProShares Supply Chain Logistics ETF's (SUPL) 10.6% gains over the past 52 weeks and 3.1% returns on a YTD basis.
UPS has lagged behind the broader market and peers, pressured by concerns over rising transportation costs and growing competition from e-commerce giants like Amazon. However, the company’s strategic investments in technology and infrastructure aim to boost efficiency and competitiveness. On Oct. 24, UPS shares jumped over 5% following a Q3 earnings report that exceeded expectations.
The company posted non-GAAP adjusted EPS of $1.76, a 12.1% year-over-year increase, surpassing the $1.63 consensus estimate. Consolidated revenues rose 5.6% year-over-year to $22.2 billion. Additionally, UPS revised its 2024 outlook, projecting $91.1 billion in revenue and a 9.6% non-GAAP adjusted operating margin, incorporating Q3 performance and the Coyote Logistics divestiture.
For the current fiscal year, ending in December, analysts expect UPS’ EPS to decline 14.8% to $7.48 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimate in three of the last four quarters while missing the forecast on one other occasion.
Among the 25 analysts covering UPS stock, the consensus is a “Moderate Buy.” That’s based on 13 “Strong Buy” ratings, 10 “Holds,” and two “Strong Sell.”
This configuration is more bullish than a month ago, with 12 analysts suggesting a “Strong Buy.”
On Nov. 12, Citigroup (C) analyst Ariel Rosa lowered UPS' price target to $158 from $163, maintaining a “Buy” rating. He cautions that rising sentiment in North American transports may lead to overvaluation risks and potential 2025 earnings disappointments.
The mean price target of $148.08 represents a 12.7% premium to UPS’ current price levels. The Street-high price target of $172 suggests an ambitious upside potential of 30.9%.
