UPS stock falls after FedEx profit warning, but Citi sees better execution and market share gains

Shares of United Parcel Service Inc. UPS, -3.12% dropped 6.7% in premarket trading toward a three month low, weighed down by rival package deliver FedEx Corp.’s FDX, -0.07% profit and revenue warning, but Citi analyst Christian Wetherbee said UPS appears to be managing the tough macro environment better than its rival. FedEx’s stock plunged 19.6% toward a two-year low, after saying late Thursday that it suffered lower global volumes, a trend that worsened toward the end of the quarter and is expected to weaken further in the current quarter. Citi’s Wetherbee said it’s hard to assume UPS isn’t affected by the macro/service headwinds that FedEx noted, but his conversations with UPS management suggest “a level of confidence” that they did better in matching costs and revenue. He wrote in a research note that FedEx’s warning was clearly a negative for UPS, “but we think UPS continues to execute more effectively and with some [market] share gains, it should be a relative outperformer.” UPS stock, which had already dropped 7.6% amid a three-day losing streak through Thursday, has dropped 13.7% year to date, while FedEx shares have tumbled 20.8%, the Dow Jones Transportation Average DJT, -1.06% has dropped 18.0% and the Dow Jones Industrial Average DJIA, -0.56% has shed 14.8%.