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UPS (UPS) hits record $171.88 price on bullish analyst calls
Delivery groups UPS (UPS) and FedEx (FDX) both traded higher on Monday after receiving upgrades from analysts on an increase in pricing power in the sector.
Deutsche Bank’s Amit Mehrotra said that changes in yields and cost per shipment bode well for package delivery companies and promptly set a new buy rating and $318 price target for FedEx.
Mehrotra revealed that Ground margins are expected to rise by 300 basis points or more in the latest quarter, which would be the biggest increase in eight years.
The bullish call was mirrored for UPS, this time at KeyBanc Capital Markets where Todd Fowler noted a “steady cadence of favourable commentary around yield, efficiency, and capital deployment initiatives from new CEO Carol Tomé”.
Fowler expects margins and returns to increase in the near future and concluded by upgrading UPS to an overweight rating with a $190 price target.
Both UPS and FedEx made gains on the back of the brokerage upgrades on Monday.
FDX stock jumped out of the gate and was trading 2.56% higher just after midday on the New York Stock Exchange.
FDX is now up 107% for the last six months with a share price of $256.93.
The Memphis, Tennessee-based company also impressed with its Q1 report last week as revenue climbed to $19.3bn.
UPS fared even better during the first session of the week, soaring to a record high of $171.88 on the NYSE.
UPS, which is set to release its Q3 earnings in late October, has also made notable gains since late March, rising 75.4%.
The analyst consensus for UPS is at hold with two strong buy, eight buy, eight hold and five sell ratings.
FedEx has a consensus at buy with one strong buy, 18 buy and six hold ratings.
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