United Parcel shares close lower on Thursday, company signs electric delivery truck deal with Arrival, announces tie-up with Waymo

United Parcel Service Inc (UPS) said earlier this week that it would order 10 000 electric delivery trucks from Arrival Ltd, as it seeks to reduce costs and tailpipe pollution.

The package delivery company also announced a tie-up with Waymo, the self-driving unit of Alphabet Inc.

United Parcel shares closed lower for the seventh time in the past ten trading sessions in New York on Thursday. The stock went down 6.70% ($7.76) to $108.00, after touching an intraday low at $107.35, or a price level not seen since July 23rd 2019 ($104.01).

Shares of United Parcel Service Inc have retreated 7.74% so far in 2020 compared with a 1.64% gain for the benchmark index, S&P 500 (SPX).

In 2019, United Parcel’s stock went up 20.02%, thus, it again underperformed the S&P 500, which registered a 28.88% gain.

The partnership between United Parcel and Arrival includes a minority investment from the package delivery company. UPS said it intended to take ownership of the 10 000 zero-emission electric trucks from Arrival by 2025. The first vehicles are expected to be deployed in London, Paris and several unnamed US cities during the second half of 2020.

Meanwhile, a six-month test run with Waymo is expected to be initiated in February, UPS said. By paying Waymo, UPS will use autonomous Chrysler Pacifica minivans to transport packages from its stores in Phoenix to a sorting center in the vicinity several times per day, the company said.

However, United Parcel did not disclose financial details for either deal.

Juan Perez, chief information and engineering officer at UPS, said that these two projects would “help us continue to push the envelope on technology and new delivery models that can complement the way our drivers work.”

Analyst stock price forecast and recommendation

According to CNN Money, the 19 analysts, offering 12-month forecasts regarding United Parcel’s stock price, have a median target of $126.00, with a high estimate of $144.00 and a low estimate of $78.00. The median estimate represents a 16.67% upside compared to the closing price of $108.00 on January 30th.

The same media also reported that at least 11 out of 22 surveyed investment analysts had rated United Parcel’s stock as “Hold”, while 8 – as “Buy”. On the other hand, 1 analyst had recommended selling the stock.