UPS Hits Record High, FedEx Extends Gains on Broker Upgrades


FedEx Inc.  (FDX) – Get Report shares jumped higher Monday, while UPS Inc.  (UPS) – Get Report traded at an all-time high, after analysts at Deutsche Bank and KeyBanc boosted their ratings on the world’s two biggest package delivery groups on the back of improving pricing trends in the sector.

Deutsche Bank analyst Amit Mehrotra lifted his rating on the stock to ‘buy’ from ‘hold’, with price target to $318 per share, citing what he called the markets underappreciation of pricing power for both FedEx and its main U.S. rival, UPS.

“We project Ground margins to be up at least 300 basis points – the best year-on-year improvement in Ground margins in any quarter since at least 2012, reflecting accelerating yield (revenue per shipment) and decelerating cost per shipment,” Mehrotra wrote in a client note. 

FedEx shares were marked 2.80% higher in early Monday trading to change hands at $257.50 each, a move that extends its six-month gain to around 107%. 

UPS, meanwhile, was upgraded to ‘overweight’ from ‘sector-weight’ by KeyBanc Capital Markets Todd Fowler, with a $190 price target, with the expectation of a “steady cadence of favorable commentary around yield, efficiency, and capital deployment initiatives from new CEO Carol Tomé, which, combined with secular trends supporting domestic package growth, should aid margins and returns.” 

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