© Reuters. UPS prefers FedEx, which is riskier, says Melius Research
By Sam Boughedda
Melius Research initiated coverage of FedEx (NYSE:) with a Hold rating and united package Service Inc (NYSE:) with a buy rating on a note on Monday.
Analysts have assigned UPS a two-year price target of $225 per share and FedEx a two-year price target of $240. They explained that businesses have been boosted during the pandemic as online orders have increased, but with the tailwinds of the pandemic easing, they are now at two different points on a similar path.
“The current environment favors UPS given a ground/domestic focus and a management team that has successfully worked to eliminate margin downside variability during an uncertain environment versus FedEx’s air/international mix,” the company wrote. analysts.
While analysts believe FedEx is embarking on a “positive and necessary” cost-cutting effort that is being appreciated by the market, they said the company “could face outsized pressure given increased leverage in air freight and the pace at which cost targets can be achieved. be accomplished.”
“For UPS, the earnings floor is now higher,” the analysts said, adding that “FedEx is an interesting restructuring story but carries more risk.”
