UPS Seems All Set To Deliver In 2019, UBS Says

A recent meeting with United Parcel Service, Inc. (NYSE: UPS) management inspired increased one firm's confidence in the company’s performance in 2019 and in multi-year EPS growth.

The Analyst

UBS analyst Thomas Wadewitz maintains a Buy rating on UPS with a price target of $121.

The Thesis

UPS has changed its approach within its Domestic Package business, Wadewitz said in a note.

Following several years of B2C shipments spearheading growth, the company has “clearly reset” its strategy, in which small and mid-sized businesses and B2B have become a key part of the mix and will be growth drivers.

Management indicated the new tools and services being offered to SMB customers and the focus on this segment would support quality revenue growth for several quarters.

UPS is likely to achieve margin expansion in its Domestic Package business from a combination of net productivity gains from its large facility investments through 2017 and 2018, initial impact from the voluntary buyout program and quality revenue growth, Wadewitz mentioned.

He also expressed optimism regarding strong momentum persisting in the company’s International business, adding that management seems to recognize that “2019 is a pivotal year where it is paramount that they deliver on their financial targets.”

Price Action

Shares of UPS traded at $111.57 Wednesday afternoon.

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