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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 (NYSE: UPS) and lowered the price target to $100 (39% downside) from $148.
byShivani Kumaresan
October 3, 2022
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  • Morgan Stanley analyst Ravi Shanker reiterated an Underweight rating on the shares of United Parcel Service Inc (NYSE: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. (NASDAQ: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 (NYSE: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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