UPS stock price target lowered to $118 by UBS on peak season uncertainty

Investing.com - UBS has lowered its price target on UPS (NYSE:UPS) to $118.00 from $124.00 while maintaining a Buy rating on the stock. The logistics giant’s shares currently trade at $88.64, down over 25% year-to-date, with InvestingPro data showing the stock trading near its 52-week low of $90.55.

The price target reduction comes after UPS delivered in-line second-quarter earnings, which UBS noted reflected "favorable execution" in managing costs within the company’s Domestic Package segment and demonstrating agility in its international operations. The company maintains strong fundamentals with a P/E ratio of 13 and offers an attractive dividend yield of 7.22%.

UPS has successfully pivoted assets away from China-U.S. routes to other international lanes, showing adaptability in its global network strategy amid changing trade patterns.

The logistics giant is progressing with its network optimization, having closed 74 domestic facilities with additional closures planned for the third quarter. However, UBS highlighted that labor cost reductions are lagging due to lower attrition rates among both part-time workers and drivers.

Despite maintaining a positive long-term outlook with the Buy rating, UBS expressed concerns about near-term challenges, noting uncertainty around peak season shipping demand from enterprise customers and potential impacts on small and medium-sized businesses that source goods from China using the de minimis exemption.

In other recent news, UPS reported its second-quarter earnings, showing a slight revenue outperformance but falling short on adjusted operating income, margin, and earnings per share. The company did not provide a full-year 2025 revenue or operating profit outlook, citing macroeconomic uncertainties. Oppenheimer, Morgan Stanley (NYSE:MS), TD Cowen, and Evercore ISI all lowered their price targets for UPS, with Oppenheimer adjusting to $100 and maintaining an Outperform rating. Morgan Stanley set a new target at $75, maintaining an Underweight rating due to visibility concerns. TD Cowen adjusted its target to $101, citing uncertainties in the global trade economy while maintaining a Hold rating. Evercore ISI reduced its target to $97, maintaining an "In Line" rating, noting that UPS’s adjusted earnings per share exceeded their estimate but fell short of the average forecast. BofA Securities downgraded UPS from Buy to Neutral, lowering its price target to $98 due to concerns over small- to medium-sized business volume and slower-than-expected cost reductions.

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