UPDATE 1-Credit Suisse upgrades United Parcel Service
Mon Sep 14, 2009 12:05pm EDT

Sept 14 (Reuters) - Credit Suisse upgraded United Parcel Service Inc (UPS.N), the world's largest package delivery company, to "neutral" from "underperform," saying the domestic and international freight environment is improving.

"Valuation now appears much more reasonable," said analyst C. Ceraso, who raised his price target on the stock to $61 from $48.

"Last April the expensive valuation appeared out of whack relative to the rest of the transport group," he said.

Since then, UPS shares were up only 10 percent, compared to FedEx's (FDX.N) 40 percent appreciation, while trucks and rails were up 20 percent and 30 percent, respectively, Ceraso said.

"Our valuation is based on the assumption that UPS can generate about $5.2 billion in EBIT in FY11, and that the company can grow operating profit 10 percent annually on a three to five-year view," said the analyst.

Shares of the Atlanta-based company were down 19 cents at $58.61 Monday on the New York Stock Exchange.