Analyst: Buy This Outperforming Shipping Giant

Analysts were unsure of UPS coming into today

Managing Editor
Apr 1, 2019 at 10:34 AM
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Berenberg this morning called out United Parcel Service, Inc. (NYSE:UPS) for having a strong global presence, and said it's "increasingly confident that it will deliver margin improvement in both its international business and U.S. this year." As such, the brokerage firm handed UPS an upgrade to "buy" from "hold," and tacked on $5 to the former $125 price target, now set at $130. In response, United Parcel Service stock is 1.5% higher at $113.47, at last check.

UPS is now set to close above its 320-day moving average for the first time since October. Prior to today, the shipping stock had encountered a ceiling of resistance at $112 in 2019, but just wrapped up its best quarter since 2013.

Berenberg's bull note comes as a bit of a rarity for the stock, with nearly 67% of covering firms sporting tepid "hold" or worse ratings. Further, UPS' average 12-month price target of $117.30 is in line with current levels. Additional upgrades or price-target hikes could push the shipping stock even higher..

Meanwhile, those wanting to speculate on UPS' short-term trajectory should consider options. The stock's Schaeffer's Volatility Index (SVI) of 17% sits in the 6th percentile of its annual range. In other words, near-term options are attractively priced at the moment, from a historical volatility perspective. 

Lastly, the equity's Schaeffer's Volatility Scorecard (SVS) stands at a lofty 93 (out of a possible 100). This means United Parcel Service stock has tended to make outsized moves over the last year, compared to what the options market had priced in -- a potential boon to premium buyers.


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