United Parcel Service could benefit from lower interest rates as inflation eases, according to BMO Capital Markets. Analyst Fadi Chamoun upgraded the stock to outperform the market. He lowered his price target to $150 from $155, but the new estimate still suggests an upside of nearly 17% from Monday’s closing price. “The B2B demand environment has been soft for almost two years, but we expect lower interest rates and a potential recovery in the industrial economy to support a return to low-single-digit growth in B2B volumes,” Chamon said. he said in a memo. The Fed began lowering interest rates earlier this year. The U.S. central bank is expected to cut interest rates again by 0.25 percentage points next week as inflation approaches the Fed’s 2% target. UPS YTD 2024 Mountain UPS According to Chamoun, inflationary pressures on UPS unit prices are also easing. The company has implemented a number of productivity initiatives, including the Network of the Future Plan, which alone is expected to save $3 billion by 2028. Chamoun believes the company’s operating margin and return on invested capital will also improve. Reinvest in more services such as medical logistics. Analysts pointed out that this is one of the company’s high value-added logistics services. Shaun said the stock is trading at a discount compared to historical levels. “UPS’s valuation is near historic lows, with free cash flow to EBITDA expected to be ~40% (in line with the past 10-year average and among the highest in the industry) “We think it offers a positive risk/return given the The yield is a bonus,” he added. Fifteen of the 32 analysts covering UPS rate the company a “buy” or “strong buy,” but the stock has declined 18.3% since the beginning of the year. According to LSEG data, the other three companies are underperforming.
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BMO Capital Markets says UPS is a buy as upgrade eases inflation
