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How Analysts View UPS ahead of Its Q1 Earnings Results

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Analysts’ recommendations

Analysts polled by Reuters have given United Parcel Service (UPS) a consensus rating of ~2.56 and a “hold” recommendation. Analysts have mixed views on the stock, as is reflected in their ratings. About 37% of analysts have a bullish stance, 56% suggest holding the stock, and the remaining 7% have a bearish view on the stock.

Of the 27 analysts covering UPS, five have given it “strong buy” recommendations, five have given it “buy” recommendations, 15 have given it “hold” recommendations, one has given it a “sell” recommendation, and one has given it a “strong sell” recommendation.

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Analysts’ average target price depicts a minimal upside potential in the stock. Their average target price is currently pegged at $117.59, which signifies a potential return of 3.5% over the next year from its April 22 closing price of $113.62.

Global economic slowdown concerns—mostly across Europe and Asia—and the ongoing trade dispute between the United States and China are likely to be the main drivers of analysts’ pessimism about UPS’s near-term prospects.

Major rating agencies, including S&P and Moody’s, have downgraded their outlooks on UPS to “negative” from “stable” in the last two months. Furthermore, brokerage and research companies have mixed views on UPS after FedEx’s (FDX) dismal fiscal 2019 third-quarter performance. Berenberg and Baird have raised their target prices on the stock, while JPMorgan Chase (JPM) has lowered its target price on the stock.

Peers’ ratings

It seems analysts have mixed opinions on the logistics and delivery industry (IYT). UPS’s competitors FDX and XPO Logistics (XPO) have received “buy” recommendations from analysts, while Old Dominion Freight Lines (ODFL) has received a “hold” recommendation.

The average target prices of $208.88 and $78.16, respectively, for FDX and XPO depict one-year potential returns of 6.6% and 17.4%, respectively. In contrast, the average target price of $153.58 for ODFL signifies a potential fall of 1.5%.

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