Stock Analysis & Ideas

Cold Chain Deal in Europe Making UPS Stock Hot in 2022

Story Highlights

UPS just announced a major acquisition in Europe. The company has now doubled its footprint as compared to 2020.

United Parcel Service (UPS) (GB:0R08), the world’s largest package delivery company, is making major headway in Europe and the move comes on the heels of its recent robust Q2 showing.

Its Q2 beat also came with ~12% higher average revenue per piece, $5.2 billion in dividends, and a 50% boost to its share buyback program.

Now, the company is all set to expand its footprint in Europe with the acquisition of healthcare logistics provider Bomi Group. This strategic transaction adds temperature-controlled locations across 14 countries, 350 temperature-controlled vehicles, and four million square feet to UPS’ portfolio.

Kate Gutmann, the EVP and President of UPS International, Healthcare and Supply Chain Solutions remarked, “Bomi enhances our portfolio of services and accelerates our journey to become the number one provider of complex healthcare logistics.”

Marco Ruini will continue to act as the CEO of Bomi and added, “With over 35 years in the healthcare logistics industry, our team has developed best-in-class services designed to meet and exceed the needs of our medical technology and pharmaceutical customers. Joining the UPS team will expand those capabilities and create an even more integrated and powerful global network for our customers.”

Significantly, Bomi caters to over 150 clients globally with its customized approach in the medical technology and pharmaceutical space. Its addition provides UPS Healthcare clients shorter shipping times, and greater flexibility in production while also helping UPS provide time-critical and temperature-sensitive services.

What’s more, the transaction further builds on UPS’ ramp-up of facilities across Germany, Australia, Hungary, and the Netherlands. The company has now doubled its global presence over 2020.

While deal terms remain undisclosed, the acquisition is anticipated to close by the end of 2022.

Is UPS Stock a Buy or Sell?

Meanwhile, the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating and a price target of $208.71. This implies a 6% potential upside.

Bloggers Are Buoyant About UPS

Bloggers, though, are Bullish about UPS. Our data shows that 90% of the bloggers covering UPS are positive, as compared to the sector average of 65%.

Closing Note

UPS continues to make the right moves at a time when supply chain challenges continue to impact key industries. This cold chain and logistics push further underscore the significance UPS is placing on the healthcare market. Additionally, a dividend yield of 2.58%, a price-to-sales ratio of 1.35, and a price-to-cash flow ratio of 10.70 make the stock attractive at current levels.

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