Parcel carrier UPS is exiting the pandemic with stronger pricing power, and that should help its stock, according to JPMorgan. UPS held an investor day Wednesday, and the initial reaction to the event wasn't strong. Shares fell more than 4% after what several analysts described as conservative guidance for 2023. However, JPMorgan analyst Brian Ossenbeck upgraded the stock to overweight from neutral and said in a note on Thursday that investors are overlooking UPS' new pricing strategy. "UPS also debuted a new pricing strategy that utilizes fully-allocated costs and real-time capacity to set rates and enforce contract compliance. This announcement sends a strong signal to the market (and FedEx) that pricing power still has momentum, which is positively correlated to parcel stock valuations," the note said. The investment firm said UPS seemed likely to beat its guidance, which could lead the stock higher. "Our buy-side survey showed a willingness to re-rate UPS higher if it can meet their margin targets and we still see upside to valuation and earnings for UPS at this point," the note said. JPMorgan hiked its price target on UPS to $243 per share from $224, which represents an upside of nearly 21% from where the stock closed on Wednesday. -CNBC's Michael Bloom contributed to this report.
