UPS Is Doing Uber-Like Surge Pricing During the Holidays and This Analyst Is Thrilled About It
A UPS plane.

UPS (UPS) is gearing up for the holiday season onslaught of online orders.

Shares of United Parcel Service Inc. (UPS) were up 0.6% to $112.53 in morning trading Tuesday after analysts at Citigroup upgraded the stock to "buy" from "neutral" due to a bullish outlook on the company's holiday season surcharges.

UPS announced in June that it will be applying surcharges to residential and large packages shipped during specific weeks in November and December.

"A key to our call beyond our expectation for better growth is UPS's move to apply peak season surcharges," analyst Christian Wetherbee wrote. "Our analysis shows $60-$100 million of incremental revenue and operating profit, yielding EPS accretion opportunity of about 3 to 5 percent."

Here is what UPS' Chief Financial Officer told TheStreet about the new pricing model. 

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