Category: UPS News

With strong free cash flow and a healthy dividend yield, valuation was analyst’s only ‘hangup’ on the stock ​

Shares of United Parcel Service Inc. delivered healthy gains Thursday, after Stifel Nicolaus analyst Bruce Chan said their recent selloff, despite continued strong fundamentals and e-commerce growth, has presented investors with a “good opportunity” to buy.

The package delivery giant’s stock rose 3.7% in morning trading. It has now bounced 6.9% since closing at a 5 1/2-month low $178.42 on Oct. 4, but was still 12.3% below its May 7 record close of $217.50.

Stifel’s Chan raised his rating to buy, just about four months after downgrading to hold, saying “there’s a lot to like about the fundamental UPS story right now.” He boosted his stock price target to $224 from $210.

“Despite tough [year-over-year comparisons], e-commerce continues to drive secular volume growth in the company’s core small package unit, and continued yield management focus is a boon in an environment with ample near-term rate momentum, in our view,” Chan wrote in a research note to clients.

UPS issued an operational adjustment to its UPS Next Day Air service guarantee that will impact shipments during the busy holiday season and possibly beyond.

The company announced that its delivery commitment times for UPS Next Day Air destined for residential locations with a typical delivery time of 10:30 AM will be extended to 12:00 PM and any Service Guarantee applicable to these shipments will be based on the revised delivery commitment times.

This new delivery time adjustment will become effective on Monday, October 2021 and will be in place until further notice.

As a reminder, UPS had reinstated most of its service guarantees for its most common parcel delivery services earlier this year that it had implemented on March 26, 2020, due to the Covid-19 pandemic.

United Parcel Service Inc. is advising customers to send holiday packages by Dec. 15 if they want to use ground service for Christmas arrival. For customers using 3 Day Select Service, the deadline is Dec. 21. For UPS 2nd Day Air Service, there’s one extra day, with a Dec. 22 deadline. And the UPS Next Day Air deadline is Dec. 23. Accenture data shows that 22% of shoppers plan to make most of their purchases on Black Friday or Cyber Monday, though retailers are starting their holiday promotions this month.