Amazon threat to FedEx overblown, it’s the postal service that’s in trouble, JP Morgan says

Since the news broke last Friday, shares of both companies have underperformed the broader market: UPS and FedEx are up 0.3 percent and 4 percent, respectively, versus the S&P 500’s 4.4 percent rebound.

UPS fell nearly 1 percent Friday, while FedEx slipped 0.34 percent to $244.19. The analyst likes FedEx the most of the two with an overweight rating and a price target of $315 on the shipper. He is neutral on UPS and his 12-month price forecast is $139.

“With a localized pick-up and delivery system beginning within the Amazon ecosystem, the service is not directly comparable to the standard ground offerings of either public carrier but rather the final mile of the USPS,” Ossenbeck added. “While UPS and FedEx could face pressure if the capabilities expand into business-to-business or international deliveries, we expect the lost volumes to SWA or the FBA Onsite optimization will actually provide some relief to the significant mix pressure from an accelerating pace of business-to-consumer volume growth.”

Amazon started taking most of its packages directly to the Postal Service in 2013, a way of avoiding the expensive last leg of the delivery in high-density metro areas.

However, pundits argue that USPS is underselling its services, with e-commerce giants taking advantage of the universal service obligation that the USPS must maintain by law.

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