Global package delivery company United Parcel Service, Inc. (UPS) has agreed to buy same-day delivery service platform Roadie for an undisclosed price. The transaction is expected to close in the fourth quarter of 2021. Shares popped 2.3% on the news, closing at $193.26 on September 10.
Roadie is a technology platform that provides local same-day delivery across the U.S. Roadie’s shipments comprise packages that are complementary to UPS’s network due to their size, perishable network, and non-traditional packaging.
Furthermore, Roadie’s platform is purpose-built to connect merchants and customers with contract drivers, enabling efficient and scalable same-day deliveries, the company said.
UPS already has a huge customer base with large enterprises, which are constantly looking for shipping services for all types of goods. A combination of Roadie and UPS will boost the shipping requirements of existing customers and add new customers, especially to UPS’s small package capabilities. (See United Parcel Service stock charts on TipRanks)
Once the acquisition is complete, Roadie will continue to operate under the same brand name. Additionally, both Roadie and UPS package drivers will continue to deliver packages in their respective networks without crossing each other’s paths.
Last month, after holding a virtual meet with the company’s top brass, Cowen & Co. analyst Helane Becker reiterated a Hold rating on the stock with a price target of $203, implying 5% upside potential to current levels.
Becker noted that management will continue to push pricing via surcharges as long as pandemic-driven industry dynamics remain favorable. Moreover, she believes that investors fail to fully appreciate the potential for a significant dividend hike in 2022, a larger share buyback program, and the sustainability of higher pricing.
The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 8 Buys, 6 Holds, and 1 Sell. The average United Parcel Service price target of $214.43 implies 10.9% upside potential to current levels. Shares have gained 20.7% over the past year.