UPS Stock Up on Lofty Price-Target Hike

The equity is already up over 43% this quarter

Digital Content Manager
Sep 21, 2020 at 3:15 PM
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The shares of United Parcel Service, Inc. (NYSE: UPS) are bucking the broad-market selloff, up 0.3% at $160.17 thanks to an upgrade to "outperform" as well as price target hike to $192 from $147 from Credit Suisse earlier today. The analyst in coverage said domestic pricing power shifting towards carriers could serve as a growth catalyst, and noted that cost-reduction efforts clear a path for margin improvement in the U.S.

The equity has staged an impressive recovery since dropping to seven-year lows near the $82 mark in mid-March. The shares' ascending 30-day moving average has guided UPS to a channel of higher highs, which culminated in its current record of $166.44 on Sept. 16. Quarter-to-date, the security is up 43%.

UPS

Analysts are pessimistic towards UPS, with 11 of the 18 in coverage sporting a tepid "hold" or worse rating, and the remaining seven carrying a "strong buy." Meanwhile, the equity's 12-month consensus target price of $150.61 is a 5.4% discount to current levels.

The options pits lean more optimistic, with calls much more popular. UPS sports a 50-day call/put volume ratio of 4.50 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 98th percentile of its annual range. This suggests a healthier-than-usual appetite for bullish bets of late. 

Traders looking to speculate on the United Parcel Service stock's near-term trajectory should consider options. The security's Schaeffer's Volatility Index (SVI) of 30% sits in the 19th percentile of its annual range, suggesting short-term options are pricing in low volatility expectations. In other words, the stock's near-term options are attractively priced at the moment.


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