Goldman Sachs analyst Jordan Alliger reiterated a Buy rating on the shares of United Parcel Service Inc (NYSE:UPS) with a price target of $176.00.

UPS reported 2Q24 EPS of $1.79 from operations, which was below GS estimate of $1.95 and FactSet's $1.99.

Domestic margin at 7.1% (vs. 8.1% est) was impacted by pressure on revenue per piece related to mix, noted the analyst.

While the analyst was reasonably encouraged that Domestic volumes did inflect positive YOY (+0.7%), it is disappointing that Domestic margin performance related in part to the yield drag and the ensuing carry forward to full-year guidance, which was lowered by the company.

The effects of the still sluggish freight environment continue to adversely impact transports, and there has to be a better tone to consumer goods demand and a pick up in manufacturing activity related to fast cycle logistics to boost the more profitable B2B portion of parcel demand, opined the analyst.

The analyst expects that the profit inflection that is expected in 2H should lend some support to the shares.

The shape of 2H24 as well as any indications on volume trajectory, yield improvement and margin potential throughout the year will be important themes to look forward to.

The analyst's 12-month price target of $176 is based on 17.0x P/E multiple applied to Q5-Q8 EPS.

Price Action: UPS shares are trading lower by 13.7% at $125.27 at last check Tuesday.

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