Goldman Sachs reiterates buy rating on UPS stock amid challenges

Published 30/06/2025, 10:58
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Investing.com - Goldman Sachs maintained its Buy rating and $124.00 price target on (NYSE:UPS) despite lowering near-term earnings expectations. Trading at $101.18, UPS currently offers a substantial 6.48% dividend yield, with InvestingPro data showing 27 consecutive years of dividend payments.

The investment bank reduced its second-quarter earnings per share forecast for UPS from $1.59 to $1.51, citing concerns about international export volumes, tradelane mix, and international margins.

Goldman Sachs pointed to "international freight flow flux and ongoing B2B softness" as factors that could further impact UPS volumes and margins in the near term.

Despite these challenges, the firm remains bullish on UPS stock, noting its "reasonable" valuation at 14.9x and 13.1x on lowered 2025 and 2026 estimates, which falls below the company’s five-year average of 16.5x.

Goldman Sachs also highlighted potential catalysts including "enhanced leverage once we emerge from the freight recession" and possible improvements in core Domestic profitability by mid-2026 if UPS successfully executes its Amazon (NASDAQ:AMZN) transition and efficiency initiatives.

In other recent news, United Parcel Service (UPS) has announced a regular quarterly dividend of $1.64 per share, continuing its long-standing commitment to shareholder returns. UPS reported revenues of $91.1 billion in 2024, highlighting its significant scale in global operations. In a strategic move, UPS appointed John Morikis to its Board of Directors, bringing his extensive experience from Sherwin-Williams (NYSE:SHW) to strengthen governance and strategic oversight. Meanwhile, BMO Capital reiterated its Outperform rating for UPS, citing a positive outlook on profit improvements and strategic capital allocation. Similarly, Bernstein analysts maintained an Outperform rating with a $133 price target, following insights from UPS CEO Carol Tomé on the company’s cost reduction and growth strategies. At the recent Annual Meeting of Shareholders, UPS successfully elected twelve directors and ratified executive compensation, while two shareholder proposals were not approved. Additionally, shareholders ratified Deloitte & Touche LLP as the company’s independent registered public accounting firm. These developments reflect UPS’s ongoing strategic initiatives and shareholder engagement.

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