UPS (UPS) PT Lowered to $127 at Credit Suisse

Credit Suisse lowered its price target on UPS (NYSE: UPS) to $127.00 (from $137.00) while maintaining a Neutral rating.

Analyst A. Landry commented, "The market was caught off guard by the company's third major capex step-up announcement in the last 3-4 years, which (along with guidance that fell short of Street expectations) sent the stock down 7% on Thursday. And while we think most investors can appreciate the benefits of UPS taking advantage of the immediate expensing of capex, the $6.5B$7B annual price tag (9-10% of sales vs prior 6-7%) was nonetheless stunning - particularly amidst the steady erosion in U.S. Domestic margins over the last several years. Investor patience is increasingly wearing thin - with many beginning to question whether it makes sense to chase growth at the expense of what (at this point) appears to be lower margins and returns. In effect, the market may begin to demand nearer term results via a more aggressive pricing strategy. Therefore, while we think downside from here may be limited, we see little in the way of catalysts for the stock to outperform."

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