NEW YORK (TheStreet) -- Shares of United Parcel Service (UPS) are rising 1.17% to $101.84 in Friday's early morning trading after analysts at Goldman Sachs upgraded the company to "buy" from "neutral" and raised their price target to $119 from $101.
"In our view, the risk/reward proposition is skewed positively," analysts said. "The stock has declined 9% ytd and the valuation is below its long-term mean, implying limited downside risk, in our view."
This action comes after the Georgia-based package and delivery company reported strong first quarter results at the end of April. The company reported earnings per share of $1.12, a 14% increase over the prior year period. This exceeded analysts' consensus estimates by 3%.
Additionally, total reported revenue of $14 billion was up 1.4% over the same quarter last year.
"We expect UPS stock to outperform our Transportation coverage over the next 12 months," analysts added.
TheStreet Ratings team rates UNITED PARCEL SERVICE INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate UNITED PARCEL SERVICE INC (UPS) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including poor profit margins and relatively poor performance when compared with the S&P 500 during the past year."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- UPS's revenue growth has slightly outpaced the industry average of 0.4%. Since the same quarter one year prior, revenues slightly increased by 1.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Air Freight & Logistics industry average. The net income increased by 12.6% when compared to the same quarter one year prior, going from $911.00 million to $1,026.00 million.
- UNITED PARCEL SERVICE INC has improved earnings per share by 14.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, UNITED PARCEL SERVICE INC reported lower earnings of $3.28 versus $4.62 in the prior year. This year, the market expects an improvement in earnings ($5.16 versus $3.28).
- In its most recent trading session, UPS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- The gross profit margin for UNITED PARCEL SERVICE INC is currently extremely low, coming in at 11.97%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 7.34% is above that of the industry average.
- You can view the full analysis from the report here: UPS Ratings Report