UPS stock bumps higher despite international headwinds forecasted for 2023
Yahoo Finance's Dave Briggs breaks down why UPS stock is surging after earnings.
Video Transcript
DAVE BRIGGS: All right, and we're going to focus on UPS. Shares closing higher despite the company missing the Street's revenue estimates by more than $1 billion. You can see 4.6% gain on the day. UPS projecting full year revenue for 2023 between $97 and $99.4 billion, just shy of the Street's estimates.
UPS CFO Brian Newman saying on Thursday's earnings call, quote, "we expect 2023 to be a bumpy year." Headwinds that will impact the business, including record high inflation, recession fears, a war in Eastern Europe, COVID disruptions in China, and US labor negotiations-- still, shares of UPS edging higher today as the company projects some of those concerns to subside in the second half of the year. So, again, just reiterating-- they see a recession first half, a recovery in the economy and in their business in the second half.
SEANA SMITH: Yeah, you've got to look at this package volume-- a little bit concerning when you take a look at the broader economy, what that could signal at least for the coming quarters. We know that the holiday period is so important for UPS, so important for its rival FedEx. And when you see that package volume drop, coming up a bit short, rather, I should say consumers really pulling back on their spending, what exactly this signals here for the next quarter or two, could be something to really keep an eye on.
And then also labor negotiations-- we know that's going to be front and center for UPS over the next couple of quarters. Those negotiations are expected to start in April. Of course, how that pans out could have real implications for UPS.
DAVE BRIGGS: Yeah, some feel this will be the most contentious labor talks they've had since the strike in 1997. They're dealing with the Teamsters. This is going to be a real tough road and it's going to cost them a pretty penny.
They did increase shipping prices 6.9%. That's on top of the 5.9% the prior year and 4.9% prior to that. So not a great story in terms of inflation coming down, because they are continuing to increase prices there at UPS.
SEANA SMITH: Yeah. They certainly are. When you take a look at that price increase, it's also going to be a question of whether or not consumers are willing to spend, how much they will be shipping, whether or not that, of course, is going to impact their behavior down the line-- certainly something to watch.
