UPS rises on upgrade to 'Outperform'
Shares of United Parcel Service Inc. rose last Thursday 09 January after a Bear Stearns analyst upgraded the stock, citing a slew of catalysts for long-term growth including current troubles at rival FedEx Corp.
Analyst Edward Wolfe raised his rating on UPS to “Outperform” from “Peer Perform,” saying the company is well positioned to grow once the domestic economy begins to improve.
He expects the company to steer guidance lower in the next few quarters as domestic freight demand remains weak and pricing stays competitive. But a settled Teamster contact, changes in senior management, and rival FedEx Corp. ‘s ground unit woes should all benefit UPS in the long-term, Wolfe said.
The company signed a five-year contract with the Teamster union in late November. In December, former Vice Chairman and Chief Financial Officer Scott Davis took the reigns as chairman and chief executive, replacing retiring Mike Eskew.
The company also announced a change to the top post of its Asia Pacific unit Tuesday, in which Ken Torok will be replaced by Senior Vice President Derek Woodward.
Wolfe said FedEx should continue to lose business to UPS as troubles at its ground unit could lead to higher costs and slower growth. He reduced his 2009 earnings expectations for FedEx Corp. by about 5 percent, but left his 2008 expectation unchanged.
Shares of UPS rose USD 2.76, or 4.1 percent, to USD 69.47 in midday trading, while FedEx shares gained USD 1.40 to USD 84.14.
Shares of United Parcel Service Inc. rose last Thursday 09 January after a Bear Stearns analyst upgraded the stock, citing a slew of catalysts for long-term growth including current troubles at rival FedEx Corp.
Analyst Edward Wolfe raised his rating on UPS to “Outperform” from “Peer Perform,” saying the company is well positioned to grow once the domestic economy begins to improve.
He expects the company to steer guidance lower in the next few quarters as domestic freight demand remains weak and pricing stays competitive. But a settled Teamster contact, changes in senior management, and rival FedEx Corp. ‘s ground unit woes should all benefit UPS in the long-term, Wolfe said.
The company signed a five-year contract with the Teamster union in late November. In December, former Vice Chairman and Chief Financial Officer Scott Davis took the reigns as chairman and chief executive, replacing retiring Mike Eskew.
The company also announced a change to the top post of its Asia Pacific unit Tuesday, in which Ken Torok will be replaced by Senior Vice President Derek Woodward.
And as FedEx continues to deal with legal, tax and labor issues related to its Ground unit contractor model – which classifies drivers as independent contractors rather than employees – UPS is poised to gain a bigger stake in the ground delivery market, Wolfe said.
Wolfe said FedEx should continue to lose business to UPS as troubles at its ground unit could lead to higher costs and slower growth. He reduced his 2009 earnings expectations for FedEx Corp. by about 5 percent, but left his 2008 expectation unchanged.
Shares of UPS rose USD 2.76, or 4.1 percent, to USD 69.47 in midday trading, while FedEx shares gained USD 1.40 to USD 84.14.
