BUZZ - Market Watch: Despite a decline in package volume, UPS still achieved profit growth

October 28 - ** United Parcel Service (United Parcel Service) UPS.N said on Tuesday (link) that by focusing on high-margin business, the company can achieve higher returns during the key holiday season and in the coming years, even if the volume of delivered packages declines.

** The company has cut millions of unprofitable home delivery packages for its largest customer Amazon.com (AMZN.O).

** The median target price from 30 brokerages covering the stock is $116.5 — according to LSEG compiled data.

Quality over quantity

** Morningstar (fair value: $109) said that as the reduction in Amazon business has come to an end, the decline in business-to-consumer (B2C) volume should slow down, although year-over-year performance in the coming quarters may still face challenges.

** Jefferies (rating “Buy”, target price: $135) pointed out that a favorable pricing spread, sustained productivity improvements, and stronger free cash flow support continuous expansion of domestic margin and drive a return to earnings growth.

** Stephens (“Overweight”, target price: $120) noted that thanks to peak season surcharges, smoother operations, and a lower year-on-year base in the first quarter, UPS’s near-term outlook is positive.

** TD Cowen (“Hold”, target price: $116) stated that UPS may see higher revenue per package, but an economic slowdown may intensify competitive pressure.

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