BMO upgrades UPS amid growing margin concerns
- BMO analyst Fadi Chamoun upgraded UPS to Outperform from Market Perform and reduced the target price to $150.
- Concerns remain about the trajectory of UPS’s Domestic operating margins in the medium-to-long term.
- The combination of cyclical tailwinds, cost reduction programs, and low valuation indicate a favorable near-term outlook.
In the United States, BMO Capital Markets analyst Fadi Chamoun has recently upgraded United Parcel Service, Inc. from Market Perform to Outperform after assessing the company’s current market position. The assessment reflects both concerns and optimism regarding UPS's domestic operating margins, which are anticipated to face potential challenges in the medium- to long-term. Notably, while the analyst anticipates a positive shift in the economic environment—linked with lower interest rates and a recovering industrial sector—the trajectory of operating margins remains a focal point for future performance evaluation. Consequently, the estimated earnings per share (EPS) for 2024 is revised to $7.49 from $7.52, while the estimate for 2025 drops from $8.81 to $8.68.