FedEx’s (FDX) announcement that it expects holiday shipments to rise 12% this year gave the stock a boost and appears to be also helping competitor UPS (UPS). But UPS’s stocking may not be quite as full as its rival’s, writes Dahlman Rose analyst Jason Seidl in a note today.
A big reason FedEx expects its holiday shipments to be so robust is its SmartPost business, which delivers packages from businesses to the U.S. Post Office to make the final delivery.
“While UPS’s holiday shipments should be solid, the company does not have a segment that is equivalent to FedEx’s SmartPost and may not see a similar jump in shipments,” Seidl writes.
UPS has been relatively cautious in its outlook this year; if management changes its tone on tomorrow morning’s post-earnings conference call, look for the stock to get a boost.
“Investors will likely be listening intently to management’s take on the economy during tomorrow’s earnings call. Although we do not believe that the commentary will represent a significant departure from the reserved tone offered at last month’s investor day, we would not be surprised if UPS provided a little more cautious optimism, as the freight industry fundamentals appear better than many had feared based on the results we have seen thus far from several carriers in the rail, trucking, and logistics sectors.”
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