Shares of United Parcel Service Inc. rallied 1.9% in premarket trade Tuesday, after the package delivery giant was upgraded at Stifel Nicolaus, which said the stock has been “oversold,” the business remains “strong” and the dividend is the “most attractive” among its peers. Analyst David Ross raised his rating to buy from hold, but cut his stock price target to $121 from $127. The stock has plunged 17% since the company announced capital expenditure plans on Feb. 1, which was well above the company’s historical spending levels, while shares of rival FedEx Corp. have lost 7.8%, the Dow Jones Transportation Average has shed 5.7% and the Dow Jones Industrial Average has declined 4.9%. Ross said just as the stock was too high in January above $132, “it’s now too low” below $106, and he believes “the shares have been oversold and find it the most attractive dividend play in large-cap U.S. transportation.” UPS’s dividend yield is 3.44% through Monday’s close, while FedEx’s yield is 0.83% and the implied yield on the Dow transports is 1.29%.
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