Tags: goldman | sachs | fedex | ups | amazon

Goldman: Buy FedEx, UPS as Amazon Fears Overblown

Image: Goldman: Buy FedEx, UPS as Amazon Fears Overblown
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By    |   Monday, 13 November 2017 02:48 PM

Goldman Sachs reportedly is advising savvy investors that shipping companies United Parcel Service Inc. and FedEx Corp. could earnings surge thanks to accelerating global trade.

Shares of United Parcel Service and FedEx Corp fell last month after a report that Amazon.com Inc was testing its own delivery service, potentially encroaching on the territory of the package delivery companies.

Goldman sees significant upside for FedEx over the next 12 months as the firm recovers from a major cyberattack on its new European subsidiary TNT Express, CNBC.com explained.

"We think the market is overlooking acceleration in global trade," wrote analyst Matt Reustle in Monday's note to clients, CNBC.com reported.

"Concerns about margins and what impact Amazon may have on the airfreight and logistics industries are overstated and point to dependency on the US Postal Service and the $125 billion capex hurdle we think it would cost to compete in airfreight and logistics on a global scale," CNBC quoted him as saying.

Amazon will oversee pickup of packages from warehouses of third-party merchants selling goods on its website and their delivery to customers' homes - a function often handled by longtime partners UPS and FedEx, according to sources cited by Bloomberg.

Amazon is testing a delivery service to make more products available for free two-day delivery and relieve overcrowding in warehouses, two people familiar with the plan told Bloomberg.

When contacted by Reuters, Amazon said it was using the same carrier partners to offer the program that it has used for years, including UPS, USPS and FedEx.

Morningstar analyst Keith Schoonmaker downplayed Amazon’s potential threat, saying the retailer constitutes a mid-single-digit proportion of earnings at UPS and low-single-digit at FedEx.

(Newsmax wire services contributed to this report).

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Goldman Sachs reportedly is advising savvy investors that shipping companies United Parcel Services and FedEx could see as much as 50 percent earnings upside thanks to accelerating global trade.
goldman, sachs, fedex, ups, amazon
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2017-48-13
Monday, 13 November 2017 02:48 PM
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