Industrials

United Parcel Service’s (UPS) Latest Financial Targets Likely ‘Carry Risk,’ BofA Says

United Parcel Service’s (UPS) latest three-year financial targets topped market expectations, though they likely “carry risk” as the company has previously missed its multiyear objectives, BofA Securities said Wednesday. The package delivery company outlined the targets Tuesday, including eyeing 2026 revenue of about $108 billion to $114 billion and adjusted operating margin above 13%. BofA said it was looking for $105 billion and 12%, respectively. The company’s outlook implies earnings of about $13.40 per share, roughly 20% above BofA’s estimate, the brokerage said. “UPS has missed its multiyear targets set at its last few analyst meetings, thus we expect its outlook to carry risk,” BofA analyst Ken Hoexter said in a note. The company’s revenue is expected to increase at a mid-single digit rate, which Hoexter said was above the industry growth rate of 2.6%, excluding Amazon.com (AMZN). “This appears to be an aggressive return-to-growth outlook, despite sustained weakness in

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Boeing Had a Good Week Cleaning House – but Now Comes the Hard Part

These 7 steps can give Boeing a path to recovery By several accounts, this long-overdue reckoning resulted from a revolt by the company’s airline customers. This was Boeing’s best week in many years. A dysfunctional management team was ousted. President and CEO David Calhoun will step down at the end of the year. Board chairman Larry Kellner announced that he would not stand for reelection. Stan Deal, CEO of Boeing Commercial Airplanes, left the company immediately. By several accounts, this long-overdue reckoning resulted from a revolt by the company’s airline customers, concerned about missed production plans, uncertain new model-certification schedules, and high-profile incidents resulting from manufacturing “quality escapes.” Now comes the hard part. Getting Boeing (BA) back on track will take years, maybe decades. Here’s what to watch for as the company tries to restore itself to health: 1. Who gets the top job? Calhoun, like 2005-2015 CEO Jim McNerney,

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CFRA Maintains Buy Opinion On Shares Of Fiserv, Inc.

CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows: FI’s share price has shown strength (+19% year-to-date) and we believe there is still more upside given improving fundamentals and strong revenue growth with high profitability. We raise our 12-month target by $20 to $180 using a forward P/E of 18.1x, in line with its three-year forward average. We keep our 2024 EPS view at $8.65 and 2025’s at $9.95; our revenue forecast is $19.6B (+9%) in 2024 and $21.4B (+9%) in 2025. In our view, FI’s core merchant business solutions, Carat and Clover, will drive revenue growth by tapping into the digital payment surge. With Clover set to enter five new international markets by 2025 and the e-commerce boom, FI’s Merchant segment, which is integrated with online tools, is poised for expansion fueled by trends like

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CFRA Keeps Sell Opinion On Shares Of The Boeing Company

CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows: Our 12-month target price of $164, cut $8, reflects a 24x multiple of projected 2025 EPS. The applied multiple is slightly below BA’s long-term historical forward average, but merited, in our view, by high regulatory risk. We cut our 2024 EPS estimate by $1.42 to $1.75 and 2025’s by $0.32 to $6.85. BA has delivered just 54 commercial aircraft in the first two months of Q1, a sharp slowdown from 79 units in the same period of 2023. In our view, this is reflective of the FAA-imposed slowdown on BA’s flagship 737 MAX production line, and it is too early to determine when that slowdown may end. We think BA has a long road ahead of it to restore its reputation for engineering quality, but the recent

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Boeing Delivered Just 3 MAX Jets in a Week. That Is a Good Thing. — Barrons.com

Sometimes what seems to be bad news is good news. Boeing stock headed lower Tuesday morning after BofA Securities pointed out the company delivered only three 737 MAX jets in a week. That pace is well below what Wall Street expects, but going slow makes sense for the company right now. Boeing stock was off 1.5% in midday trading at $188.59 a share, while the S&P 500 and Nasdaq Composite were both up about 0.3%. One of the factors influencing shares on Tuesday is 737 MAX deliveries. BofA Securities analyst Ron Epstein, who tracks deliveries of the planes, said he had counted just 16 MAX deliveries in March through the 21st. Only three of those were delivered in the week leading up to that date. Boeing said in response to a request for comment that it would post March delivery results to its website on April 9. It didn’t address

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3M Invests in Hydrogen Electrolyzer Manufacturer Evoloh

3M (MMM) said Tuesday it has invested in Evoloh, a technology company that’s working to scale up the manufacturing of electrolyzers to make green hydrogen. Separately, Evoloh said it has raised an oversubscribed $20 million Series A round, with participating investors including 3M Ventures and a subsidiary of NextEra Energy Resources.

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United Parcel Service Likely to Set Better, Bolder 3-Year Objectives, BofA Says

United Parcel Service (UPS) will likely set “better and bolder” three-year objectives, BofA Securities said in a note Tuesday, ahead of the company’s investor day. The company is hosting an investor day on Tuesday and is expected surpassing revenue and margin targets, but more details are awaited at the conference. UPS Chief Executive Carol Tome sees growth in small package market from 2024 and onwards, and a focus on premium markets and productivity. Among the targets is a revenue of $108 billion to $114 billion in 2026, a 6% to 8% compound annual growth rate, compared with BofA’s estimate of $105 billion in revenue. The company projects operating margin of 13% or higher, led by Domestic operations targeting 12% versus BofA’s estimate of 10%. “Quick math on mid-point revenues and margin targets could indicate an approximate $13.40 of EPS on UPS’ targets vs. our $11.10 2026 EPS estimate, a 20%

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UPS Says No Price War Despite Excess Parcel Capacity

United Parcel Service said that there is excess parcel capacity of 12 million pieces a day in the U.S., of which 6 million are held by the Postal Service and the remaining by carriers including UPS. UPS estimates that overall, carriers delivered 84 million parcels a day at the end of 2023, lower than previously projected because consumers pulled back spending as inflation skyrocketed. However, UPS CEO Carol Tomé said this is not indicative of a price war. She added that UPS is no longer reducing its intake of Amazon parcels, as part of previous efforts to reduce its exposure to a single customer. Amazon makes up more than 11% of UPS’ revenue. “The glide-down is over,” she said.

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Boeing Ratings Placed on Review for Downgrade by Moody’s

Boeing’s (BA) Baa2 senior unsecured rating and Prime-2 short-term rating were placed on review for downgrade by Moody’s on Tuesday. Moody’s said it believes the company “will be unable to deliver 737 narrow-body aircraft at the volumes required for it to materially expand its free cash flow and retire debt in a reasonable timeframe.”

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UPS Plans for More Capex As Labor Contract Costs Start to Pass

United Parcel Service plans to devote a larger chunk of its revenue to capital spending through 2026 as margin pressures from the costs of its labor contract begin to subside, CFO Brian Newman tells WSJ. The delivery giant expects capital spending between 2024 and 2026 to comprise about 5.5% of total revenue, up from 4.9% the prior comparable period. UPS and union leaders last summer agreed to a new five-year pact, the costs of which were particularly substantial in the first year. The company is continuing to cut costs and boost efficiencies, for example by shedding 12,000 jobs and expanding use of RFID technology, Newman says.

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