UPS delivers on margins even as package volumes take a detour
UPS•United Parcel Service said its focus on higher-margin business lets it earn more while delivering fewer packages during the holiday season and in coming years. It cut millions of unprofitable packages for Amazon, its largest customer, while analysts’ median price target is $116.50.
1. Higher-margin focus
United Parcel Service said its focus on higher-margin business allows it to earn more while delivering fewer packages during the key holiday season and in the years ahead. The company cut doorstep deliveries of millions of unprofitable packages for Amazon, its largest customer.
2. Analyst views
Morningstar said business-to-consumer volume declines should moderate now that the Amazon pullback is complete, though year-over-year comparisons are likely to remain challenging for the next few quarters. Jefferies cited positive pricing spreads, productivity gains and stronger free cash flow as support for domestic margin expansion and renewed earnings growth; the median price target from 30 brokerages is $116.50.
