UPS Stock Has 25% Upside, According to One Wall Street Analyst

Core Viewpoint - The recent performance of United Parcel Service (UPS) shows improvement in key metrics, indicating potential for future growth despite some challenges [2][4]. Group 1: Financial Performance - UPS reported a 5.4% increase in delivery volumes in the third quarter, benefiting from easier year-over-year comparisons and growth in lower revenue per piece (RPP) volume [3]. - The company successfully reduced cost per piece (CPP) by 4.1% in the third quarter through capacity adjustments, job cuts, and location rationalization, leading to an increase in full-year adjusted operating margin guidance from 9.4% to 9.6% [3]. - The stock is currently trading at a price-to-earnings ratio of 18.1 times the estimated earnings for 2024, which is considered reasonable given the prospects for double-digit earnings growth in the coming years [5]. Group 2: Market Outlook - Analysts express optimism that UPS may have overcome its most challenging period, as indicated by the positive trends in delivery volumes and cost management [4]. - Despite the positive outlook, UPS faces challenges in meeting its full-year guidance of $2.95 billion in adjusted operating profit, as RPP continues to decline due to a shift towards lower-margin deliveries [6]. - The current dividend yield of 4.9% appears sustainable, assuming this year is a trough for the company [7].