Citi analyst Christian Wetherbee said the firm sees a “modestly negative reaction” in UPS (UPS) shares to the International Brotherhood of Teamsters, or IBT, contract agreement as “reasonable” in the context of the headwinds the contract might present to earnings in the second half and 2024. The year one wage increase is “elevated” at around 8% and overall the firm sees some risk to UPS’ 2023 guidance on the Q2 call. The firm, which assumes the industry reaction to this contract would be a push for greater price to help offset cost inflation, thinks the read to FedEx (FDX) is positive. Citi has a Buy rating and $200 price target on UPS shares.
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