BMO Capital analyst Fadi Chamoun downgraded the rating on United Parcel to a Hold yesterday, setting a price target of $96.00.
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Fadi Chamoun’s rating is based on several challenges facing United Parcel Service (UPS) that have led to a Hold rating. The company is experiencing persistent macroeconomic challenges, particularly in the B2B segment, which has not shown the expected recovery. Additionally, changes in U.S. trade policies, including the end of de minimis exemptions, have added complexity and negatively affected major trading routes, impacting profitability.
UPS is undergoing a significant transformation of its U.S. domestic network, aiming to focus more on small and medium-sized businesses and reduce reliance on low-margin B2C operations. However, the anticipated cost savings are progressing more slowly than expected, and the insourcing of Surepost has been more challenging than initially anticipated. These factors, combined with ongoing weak demand in the B2B sector, are expected to continue affecting profitability, leading to a cautious outlook and a Hold rating.
According to TipRanks, Chamoun is a 5-star analyst with an average return of 13.5% and a 61.48% success rate. Chamoun covers the Industrials sector, focusing on stocks such as Canadian Pacific Kansas City, CSX, and Union Pacific.