2023-05-16 08:06:58 ET
UPS ( NYSE: UPS ) will be in the spotlight this summer with the threat of a strike looming.
The background is that UPS and the International Brotherhood of Teamsters have begun national contract negotiations ahead of a July 31 deadline when the current agreement expires. So far, deals with the union have been worked out with most of the outstanding supplemental agreements, which govern local issues. However, the master agreement covering more than 300K workers still need to be worked out. Notably, the UPS labor deal will be the largest private sector collective bargaining agreement in the U.S. and will involve the direct participation of Teamsters President Sean O’Brien.
Deutsche Bank reiterated a Buy rating on UPS ( UPS ) ahead of the potential labor turmoil. Analyst Amit Mehrotra factored in the Teamster's strike fund and strike pay benefits, wage structures, and costs associated with potential driver classification changes.
"While the rhetoric has heated up, and we expect a strike authorization vote in the next few weeks, we feel comfortable that a strike will not occur," he noted.
Mehrotra and team warn that UPS shares may continue to underperform as the July 31 contract deadline gets closer, but the firm expects strong outperformance if and when a work stoppage is averted, which is expected will be the case.
Shares of UPS are down more than 13% over the last six weeks.
More on UPS:
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- UPS: Near-Term Headwinds Keep Me On Sidelines
- More articles from Seeking Alpha analysts
- Growth metrics for UPS
- Relative strength index and moving averages
- Seeking Alpha's Quant Rating for UPS
For further details see:
UPS could have a rocky summer amid Teamsters showdown - is the stock a buy?