By Emily Dattilo
It's time to bet on a pair of parcel-shipping stocks, Truist Securities says.
Analyst Lucas Servera began coverage of UPS and FedEx with Buy ratings and respective stock-price targets of $140 and $305.
UPS stock gained 1% to $116.39 in Thursday trading, while FedEx edged 0.4% lower to $242.54.
Truist believes UPS can benefit from building out higher-margin areas -- small-and-medium businesses and healthcare, saying there is also the potential to improve margins with efforts to boost efficiency and contain costs.
In January, the company said that its business shipping parcels for Amazon.com would be cut in half over the coming 18 months. Though that "is likely to pressure topline results, we believe this is already priced into the stock," the analysts wrote.
FedEx, meanwhile, is undergoing a structural transformation to improve efficiency and margins. In the past, the company has struggled with operating margins compared with UPS because of its separate Express and Ground networks.
A slate of new initiatives should "eliminate redundancies, enhance its cost discipline, and ultimately achieve a leaner, more profitable operation," they wrote.
Write to Emily Dattilo at emily.dattilo@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 13, 2025 12:21 ET (16:21 GMT)
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