Ahead of the Bell: UPS
NEW YORK -- Citi cut its earnings forecast for UPS, citing weakening speedy package volumes and rising fuel costs.
There are a number indicators pointing to a slowdown in air freight, according to research Monday from analyst Christian Wetherbee.
The world's largest package delivery company and rival FedEx Corp. have both said that their fastest shipping services are trailing off as customers try to conserve cash.
Reservations about spending money on shipping has occurred at a time when jet fuel prices are jumping. Prices rose 14 percent since the beginning of the third quarter while most reports of airfreight cargo demand have fallen.
The analyst cut his third-quarter earnings prediction for UPS by 5 percent and trimmed his forecast for next year and 2014 by between 1 percent and 2 percent, respectively.
Wetherbee is still recommending stock in the Atlanta company and maintained an $86 price target because he expects package volumes will get better next year as well as potential growth from UPS' pending acquisition of Dutch delivery company TNT Express.
Shares of United Parcel Service Inc. slipped 27 cents to $72.83 before the markets opened Monday.