UPS' Risks Building Into 2023 Prompt 32% Price Target Cut By This Analyst

• Morgan Stanley analyst Ravi Shanker reiterated an Underweight rating on the shares of United Parcel Service Inc (NYSE: UPS) and lowered the price target to $100 (39% downside) from $148.

• The analyst thinks UPS' normalized EPS would be $8 - $9 versus $10 before and compared to the pre-pandemic level of $7.50.

• In addition, significant idiosyncratic risk from the Amazon.Com, Inc. (NASDAQ: AMZN) business potentially going from 'Glide Down, to 'Glide Out' in 2023 and union contract renegotiations could push the normalized EPS even lower, added Shanker.

• The analyst does not expect the company to miss the upcoming Q3 FY22 earnings by anywhere close to the magnitude of that of FedEx Corp (NYSE: FDX).

• Related: Post-Pandemic Unwind? 4 FedEx Analysts Talk Pre-Earnings Miss

• The analyst attributed the reduction of estimates and price target to increased post-pandemic mean reversion risk, AMZN insourcing and competitive risk in 2023, as well as union contract negotiation risk in 2023.

• Price Action: UPS shares are trading higher by 1.36% at $163.74 on the last check Monday.

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