UPS Earnings Better and Bigger than Expected – Evercore ISI

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UPS (NYSE:UPS) reported earnings before the open Tuesday, beating consensus expectations. However, the beat hasn’t resulted in a share price jump, with the stock down 4.4% in the early part of the session.

Despite the fall, an Evercore ISI analyst, who has an Outperform rating and $227 price target on the stock, told investors that his first take is that the results are “better (and bigger) than expected.”

“UPS posted 2Q22 EPS of $3.29 (excluding $0.04 of one-time items), coming in ahead of our $3.19 forecast and the average Street estimate of $3.16. Both total revenue and EBIT exceeded our expectations, primarily on ongoing pricing strength,” said the analyst. “Importantly, UPS reaffirmed all important guidance metrics for full-year 2022 (revenue of $102 billion, consolidated adjusted operating margin of 13.7%, adjusted return on invested capital above 30%, capex of 5.4% of revenue equating to roughly $5.5 billion, and dividend payments of about $5.2 billion), while increasing its targeted share buyback total to $3 billion (from $2 billion).”

However, the analyst stated in the note that they expect the stock to “outperform today owing to the 2Q EPS upside as well as the maintained guidance, as we got a sense from our conversations with investors that the softening macro backdrop since the April 1Q release had resulted in a view that the guidance range was at risk today.”

“With most of the upside to 2Q coming from pricing, which is more in the company’s control than macro-related volumes, there may also be more conviction in the guidance range from the investment community,” he concluded.