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Deutsche Bank upgrades UPS, says macro concerns are now fully priced into the stock

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Deutsche Bank is changing its perspective on United Parcel Service , believing macro concerns are now priced into the stock. Analyst Amit Mehrotra upgraded shares of the transport company to buy from hold and lifted the bank’s price target to $220 from $197 a share. The new target implies upside of 22.3% from Monday’s close of $179.91. Earlier concerns of a shifting macro environment and labor contract negotiations are already reflected in the shares, Mehrotra said. “In the near-term, we think market participants are overly focused on volume growth and not on mix and productivity initiatives, which we think can drive positive revenue growth and solid contribution margins despite modestly lower domestic volumes by market participants,” he wrote in a note Monday. Shares of UPS have come under pressure this year, falling 16% amid a murky macro picture. The stock’s gained 7% this month, however. Going forward, Mehrotra expects forthcoming teamster contract negotiations to fare “more benign than expected.” He also highlighted the company’s continued ability to generate solid operating performance in this difficult environment. “The bottom line is UPS shares appear to us as overindexing transitory headwinds rather than the structural opportunity for consistent profitable growth,” Mehrotra wrote. “While this is completely understandable in the current macro environment, we feel we’re closer to the point where shares can get better credit for the sustainable returns being generated.” Shares gained a little over 1% before the bell. — CNBC’s Michael Bloom contributed reporting

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