UPS Downgraded to Equal Weight from Overweight at Barclays

Barclays is piling on United Parcel Service, Inc. UPS with a downgrade following UPS’s downward revision to quarterly guidance last week. Barclays, who says it “got [UPS] wrong,” moved the price target to $105, down from $116.

Barclays analysts note that despite the fact that UPS is outgrowing FedEx, it is not able to convert that growth into EPS – meaning that the company is trading at a lower price and profitability.

And, interestingly, the Barclays analysts point to UPS’s obsessive, customer-first mentality as the problem. “We are concerned the relentless focus on maintaining service and share with competitors could leave profitability in a lurch beyond the next few quarters,” the note says.

The bottom line: there are more high quality, large cap companies that can deliver a better return – notably Union Pacific Corporation UNP, Honeywell International Inc. HON and United Technologies Corporation UTX.