UPS shares rise as Wall Street turns more bullish

Investing.com -- United Parcel Service saw its shares climb around 1.2% in premarket trading on Wednesday as Wall Street analysts from Wolfe Research and Bernstein issued more optimistic outlooks for the logistics giant.

Wolfe Research upgraded UPS from Peer Perform to Outperform, citing expectations of a positive turnaround in U.S. package margins. 

“We expect U.S. margins to inflect positive y/y in C25, which historically leads to much better performance for the stock,” said the firm.

Wolfe predicts margins will improve by 100 basis points to 8.5% in 2025, driven by moderating cost inflation and a shift towards higher-yielding business-to-business (B2B) shipments. The firm set a year-end target price of $147, noting the stock's attractive valuation and a high dividend yield of 5.2%.

Bernstein echoed this bullish sentiment, maintaining its Outperform rating on UPS and raising its price target to $179 from $172. 

“We like UPS here as they have the best visibility to unit cost inflation,” they wrote.

The firm pointed out that despite a challenging 2024, marked by cost pressures and demand headwinds, the outlook for 2025 is brighter. 

Bernstein emphasized that UPS is well-positioned to benefit from an improving macroeconomic environment, with B2B volumes expected to stabilize or grow slightly. 

Both firms noted the challenges UPS faced in 2024, including weak volumes, increased labor costs, and a shift toward lower-margin consumer shipments. However, with strategic adjustments and a more favorable market setup, they believe UPS appears set for a stronger performance in the coming year.

 

Source: Investing.com