On Tuesday, Evercore ISI adjusted its financial outlook for United Parcel Service (NYSE:UPS), reducing the price target to $138 from $145 while maintaining an In Line rating for the company's stock. This adjustment comes in the wake of UPS's second-quarter earnings for 2024, which fell short of expectations. The logistics giant reported an adjusted earnings per share (EPS) of $1.79, which was below Evercore ISI's prediction of $1.94 and the consensus estimate of $1.99. The company's performance was affected by a challenging mix of products that pressured yields and margins.
In addition to the earnings miss, UPS has revised its full-year 2024 guidance. The company now expects revenue to be approximately $93 billion, a slight shift from the previously estimated range of $92.0 billion to $94.5 billion. Furthermore, the consolidated operating margin forecast has been lowered to 9.4%, down from the prior guidance of 10.0% to 10.6%.
The revised figures suggest that the latter half of the year may continue to pose challenges for UPS. Evercore ISI has indicated that their third-quarter EPS estimate for UPS will be decreased further, now sitting at $1.60 compared to the previous estimate of $1.78. This is notably lower than the Street's expectation of $2.04. The fourth-quarter assumptions are also seen as potentially too high to meet the new full-year targets.
Reflecting these developments, Evercore ISI has also reduced its full-year EPS forecasts for UPS for both 2024 and 2025. The new estimates stand at $7.56 and $9.20, down from $7.90 and $9.66, respectively. Despite these changes, the firm has chosen to retain its In Line rating on UPS shares, suggesting that the current stock price may adequately reflect the company's near-term prospects.
In other recent news, United Parcel Service (UPS) reported a downturn in its second-quarter earnings, with an adjusted profit of $1.79 per share, and a 1.1% decline in revenue to $21.8 billion. This is attributed to decreased demand for small-package delivery and increased expenses from its Teamsters labor contract. In a strategic move, UPS announced its intention to acquire Estafeta Mexicana S.A. de C.V., a prominent express delivery company in Mexico, to expand its logistics and delivery services across North America. The financial details of the deal, expected to be finalized by 2024, were not disclosed.
UBS maintained a Buy rating on UPS, adjusting its second-quarter earnings per share (EPS) estimate from $2.00 to $1.95, reflecting an anticipated improvement in Domestic Package EBIT. Additionally, UPS entered into an agreement to sell its Coyote Logistics Truck Brokerage business to RXO for $1.025 billion, with plans to revise its financial outlook following the deal's closure. Amid these developments, UPS also announced the departure of its Chief Financial Officer, Brian Newman, and has initiated a search for his replacement. These recent developments are part of the evolving trajectory of UPS.
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