Shares of United Parcel Service (UPS) rose more than 3% in afternoon trading Monday following an upgrade to "Buy" from "Hold" at Deutsche Bank, with a price target of $135 from $125, equating to a 15% upside on a total return basis.
In its note, the bank said it's "applying a more stringent approach to stock selection in 2018- balancing the cyclical exuberance of near-term fundamentals with the structural realities of returns over a cycle."
Their upgrade "reflects secular, e-commerce growth opportunities and current valuation that we believe overly discounts a heightened investment cycle. Ultimately we see two turns of additional multiple expansion opportunity for UPS on 2019 earnings, which together with 3% dividend yield implies double-digit return potential (equating to $15B of incremental equity value creation)."
More of What's Trending on TheStreet: