Stifel cuts UPS stock price target to $124, maintains Buy rating

On Wednesday, Stifel analysts reduced the price target for UPS (NYSE:UPS) shares to $124 from the previous target of $145. Despite the adjustment, the firm continues to recommend a Buy rating for the logistics giant. The revision comes amid concerns about UPS’s performance in a challenging economic climate, with rising recessionary fears and the impact of protectionist trade policies on trans-Pacific air cargo revenue. The stock has declined nearly 26% over the past six months and currently trades near its 52-week low of $90.55. According to InvestingPro analysis, UPS appears undervalued at current levels, with additional insights available in the comprehensive Pro Research Report.

The company managed to surpass Wall Street’s expectations, posting an adjusted earnings per share (EPS) of $1.49, which was higher than the consensus estimate of $1.38 but fell short of Stifel’s forecast of $1.54. Trading at a P/E ratio of 13.8 and offering a substantial 6.78% dividend yield, UPS has maintained dividend payments for 27 consecutive years. The results have been interpreted as a testament to UPS management’s execution abilities, especially considering the operational challenges in the parcel delivery industry and the strategic shift away from relying heavily on Amazon (NASDAQ:AMZN), a major but less profitable customer.

Despite UPS traditionally being a low-beta stock, implying lower market volatility, Stifel notes that the current trade environment presents additional hurdles. The network realignment and the move away from Amazon are part of a broader strategy to navigate these headwinds effectively. InvestingPro data reveals that 13 analysts have recently revised their earnings expectations downward for the upcoming period, suggesting continued near-term challenges.

Stifel’s commentary suggests that while the economic backdrop is fraught with uncertainty, UPS’s recent performance could be seen as a positive indicator of the company’s management and strategic direction. This sentiment is particularly relevant in light of investor skepticism following the Teamsters contract negotiations in late 2023.

In summary, while Stifel acknowledges the risks and challenges faced by UPS, the firm’s analysts believe in the company’s ability to deliver in difficult times. The price target reduction to $124 reflects a more cautious outlook, yet the Buy rating indicates confidence in UPS’s potential for growth and resilience.

In other recent news, United Parcel Service Inc. (UPS) reported its first-quarter 2025 earnings, showing a slight beat in earnings per share (EPS) with $1.49 compared to the forecasted $1.44. Revenue for the quarter reached $21.5 billion, slightly above expectations. Despite these positive results, the company has suspended its full-year outlook due to ongoing trade uncertainties, particularly concerning tariffs. Analysts from Loop Capital and Stephens have adjusted their price targets for UPS, with Loop Capital lowering it to $105 and Stephens to $101, both maintaining a Hold or Equal Weight rating on the stock. The revisions follow UPS’s guidance for the second quarter, which did not meet consensus expectations. UPS is also undertaking significant operational changes, including plans to reduce its workforce by 20,000 positions and close 73 facilities by the end of June to address anticipated volume declines, particularly from Amazon. Despite these challenges, UPS expects to increase domestic revenue per piece during the second quarter, although international profitability is projected to remain subdued. The company continues to focus on managing capacity and maintaining pricing discipline amidst the current economic environment.

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