United Parcel (UPS.US)'s impressive performance ignites stock prices Wall Street analysts have raised their target prices

The Zhitong Finance App learned that the stock price of United Parcel (UPS.US) is expected to record the best weekly performance since May this week. Previously, the express delivery giant's third-quarter profit exceeded market expectations and raised its performance guidelines. CEO Carol Tomé anticipates that strong demand during the holiday season will drive an average daily package volume increase of about 25% month-on-month. Wall Street analysts then raised their target prices one after another.

United Parcel shares fell slightly by 0.5% before the US stock market on Wednesday. The stock has accumulated a cumulative increase of 4.9% so far this week, and is expected to rise for the fourth consecutive week.

Bank of America: There is still room for improvement in profit margins

According to Bank of America, there is still room for growth in United Parcel's profit margin after exceeding expectations in the third quarter and raising guidelines. Bank of America raised the target price of joint parcels from $108 to $114, maintaining a “neutral” rating.

The bank expects United Parcel's profit to improve steadily over the next few years. Bank of America analysts believe that stronger growth in high-end services, prudent pricing decisions, and improved operational efficiency should help drive earnings growth.

Goldman Sachs, on the other hand, raised the target price of United Parcel from 132 US dollars to 135 US dollars, maintaining the “buy” rating, which means about 27% upward space. Analysts said that the revenue per package in the US market was better than expected, and the profit margin of the international business increased, which helped United Parcel surpass expectations in the third quarter.

CEO: Demand is expected to remain strong during the holiday season

In the third quarter earnings call, Co-Parcel CEO Carol Tomé said that she expects strong freight demand during the holiday shopping season this year, and the rise in online shopping demand and package volume is expected to support the fourth quarter business.

“When it comes to the holiday season, American consumers are still resilient, and the outlook for holiday demand is strong. According to industry forecasts, the average retail sales of online shopping during the holidays will increase by about 9% compared to last year. More than 100 US customers contributed about 80% of our peak package volume during the peak season. Based on their forecasts, we expect the average daily package volume in the fourth quarter to increase by about 25% compared to the third quarter.”

In addition to preparing for the peak of the holiday season, United Parcel is also making a number of adjustments to improve revenue quality and enhance operational performance. The company cut its low-margin delivery business, including reducing the volume of Amazon-related shipments by about half to free up production capacity. Tomé said the company is seeking more growth from high-end services while adjusting the business structure to support better returns.

Retail investor sentiment is changing

On the Stocktwits platform, retail investors' sentiment about United Parcel shares changed from “bearish” to “bullish.”

A user said, “United Parcel voluntarily abandoned the low profit margin business volume, yet it still exceeded expectations and raised the guidelines. Wall Street is finally starting to reward a company that has shrunk the right way.”

Since this year, the stock price of United Parcel has increased by a total of 12%.