Shares of the leading package delivery company UPS (NYSE:UPS) are down over 5% in one year, underperforming the S&P 500’s (SPX) nearly 24% gain. However, Wells Fargo analyst Allison Poliniak expects UPS to bounce back and has added the stock to Wells Fargo’s Q1 2024 “Tactical Ideas” list on January 2.
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Poliniak anticipates that UPS’s investments in its network, including consolidation and modernization, will enable it to streamline costs, resulting in margin expansion. The analyst has a Hold rating and price target of $175 on UPS stock, implying a 10.5% upside potential from current levels.
Investors should note that 2023 has turned out to be a bumpy year for UPS as higher labor costs, the slowdown in demand, and macro headwinds remained a drag on its revenue and earnings. However, the company is focused on adjusting its network to match volume levels. Moreover, it is reducing expenses within the network in response to lower volumes. UPS is also adding new customers, which is positive. With this backdrop, let’s look at the Street’s forecast or UPS stock.
What is the Outlook for UPS Share?
While UPS is taking measures to improve its financial and operating performance, demand softness and lower consumer spending in the European market continue to pose challenges.
UPS stock sports a Moderate Buy consensus rating based on seven Buys, 11 Holds, and one Sell recommendation. Further, analysts’ average price target of $165.16 implies a limited upside potential of 4.31% over the next 12 months.
