Why Is United Parcel Service (UPS) Stock on the Rise Today?

  • United Parcel Service (UPS) is trending today after an analyst at Deutsche Bank upgraded the shares to a “buy.”
  • The analyst cited expectations of growth in the next year and raised their price target to $220 per share.
  • UPS stock rose moderately in early trading today on the news.
UPS stock - Why Is United Parcel Service (UPS) Stock on the Rise Today?

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Investors of United Parcel Service (NYSE:UPS) just got a much-needed shot in the arm, as a big-bank analyst has upgraded UPS stock. Perhaps, it’s time for financial traders to quit obsessing over macroeconomic challenges and instead consider United Parcel Service’s recovery potential.

UPS has, without a doubt, struggled amid supply-chain constraints and elevated inflation. However, Deutsche Bank analyst Amit Mehrotra is choosing to see the proverbial glass as half-full.

“In the near-term, we think market participants are overly focused on volume growth,” Mehrotra observed. Instead, the analysts suggests financial traders should focus on United Parcel Service’s “mix and productivity initiatives, which we think can drive positive revenue growth and solid contribution margins despite modestly lower domestic volumes by market participants.”

In other words, UPS could stage a turnaround in 2023 even if fewer packages are being delivered now. Granted, Deutsche Bank downgraded UPS shares to “hold” a year ago, in part due to difficult economic conditions. However, Mehrotra assures that concerns surrounding United Parcel Service “are now fully reflected in shares and widely held by market participants.”

What’s Happening with UPS Stock?

Mehrotra’s upbeat commentary helped propel UPS stock 2% higher this morning. That’s a decent-sized move for a stock that isn’t especially volatile.

Today’s traders also learned Deutsche Bank upgraded United Parcel Service shares from “hold” to “buy.” Furthermore, the analysts raised their price target on the shares from $197 to $220.

Not only that, but Mehrotra seemed to give a shout-out to the executives at United Parcel Service. The analyst acknowledged, “It’s easy to be neutral or negative on UPS in the current environment.” Mehrotra added, however, that this is “the time to get more positive, especially under the stewardship of the current management team.”

During the coming year, United Parcel Service’s management could orchestrate an impressive recovery for the package-delivery company. If that occurs, UPS stock might actually hit Mehrotra’s $220 price target sooner than expected.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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