CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
Our 12-month target price of $150, cut $37, reflects a 14.5x multiple on our revised 2024 EPS estimate. The applied multiple is below UPS’s historical forward average, but is merited, in our view, by concerns over the pace of the U.S. market recovery. We cut our 2023 EPS estimate by $1.23 to $9.28 and 2024’s by $1.66 to $10.41. Q3 operating EPS of $1.57 vs. $2.99, beat the consensus view by $0.01, although the adjusted operating margin of 7.7% was well below the 13.0% number from the year-ago quarter. We note that margins narrowed on two major fronts: an 11% reduction in U.S. Ground freight volume, and a 6.6% reduction in International average daily volume. Management has been able to offset the volume deterioration to some degree with better pricing (revenue per piece up 2% in U.S. Domestic). Nonetheless, U.S. volumes exited September down 7.4% Y/Y, so we think it may still be some time before we get to easier comps as the U.S. consumer remains under pressure.