Sell-side firm, Credit Suisse, today released its report on United Parcel Service, Inc. (NYSE:UPS). The report was compiled on the basis of research analysts' meetings with UPS CFO, Richard Peretz, IRO, Scott Childress, VP Investor Relations, Aldred Williams and District Manager, Rosemary Turner.
The firm noted that the company was poised to grow amid evolving ecommerce business in the US. While Amazon.com, Inc. (NASDAQ:AMZN) continued to lead the market, traditional retailers are also finding ways to synergize their businesses online. The current challenge for the company is to boost its margin profile on B2C packages, as the ecommerce journey gathers steam. UPS is doing so by improving productivity through its hub improvisations as well as creating synthetic density through Access Points, SurePost Redirect, and MyChoice programs. The courier company is confident that through these steps, it will be able to increase its market share.
Preparation for Peak Season
UPS has once again been planning for the upcoming peak season and will utilize its control-tower approach as it hires 95,000 seasonal workers, mostly drivers and package handlers, for the holiday season. The company’s management is optimistic on its investments in On-Road Integrated Optimization and Navigation (ORION) and hub automation during 2016.
Increase in Base Price expected
Amid pressure from different courier companies and customers’ preference for them over traditional post office, the US Postal Service (USPS) is intending to renovate its aging fleet as well as modify its cost allocation methodology for competitive package products. Research analysts believe that, while not necessarily imminent, these changes could force the USPS to continue to hike its postal rates. In turn, this could ultimately raise the parcel industry pricing floor, which will result into long term positives for both UPS and FedEx Corporation (NYSE:FDX).
UPS Stock Movement
During intraday trading today, UPS stock remained bound in the $106.16-107.20 range. It was trading at $106.86, down 0.21%, in the after-hours at 4:59PM EDT, September 16.