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Investing.com - BofA Securities downgraded UPS (NYSE:UPS) from Buy to Neutral on Tuesday, while lowering its price target to $98.00 from $115.00. The shipping giant, currently trading near its 52-week low of $90.55, has seen its stock decline about 17% year-to-date. According to InvestingPro data, nine analysts have recently revised their earnings expectations downward.
The downgrade reflects a larger-than-expected deceleration in small- to medium-sized business (SMB) volume, which BofA attributes to tariff pressures. The firm also cited slower-than-anticipated cost reduction efforts at the shipping giant, which reported $90.91 billion in revenue over the last twelve months.
BofA Securities noted accelerating declines in Amazon (NASDAQ:AMZN) business, projecting 30% year-over-year drops in the second half of the year compared to 13% declines in the first half. Higher than expected Ground Saver costs and delayed benefits from UPS’s voluntary driver separation program further contributed to the downgrade.
The firm reduced its price objective based on a multiple of 14.0x (down from 15.0x) its 2026 EPS estimate, which it lowered by 9%. BofA explained the multiple reduction reflects "rising uncertainty and earnings pressure."
BofA Securities also cut its earnings per share estimates across multiple periods, reducing its third-quarter 2025 forecast by 12% to $1.38, its full-year 2025 estimate by 4% to $6.70, and its 2026 projection by 9% to $7.00.
In other recent news, United Parcel Service Inc. (UPS) reported its second-quarter earnings for 2025, showcasing a mixed financial performance. The company posted a diluted earnings per share (EPS) of $1.55, which fell short of the average forecast of $1.57. However, UPS managed to surpass revenue expectations, reporting $21.2 billion compared to the anticipated $20.8 billion. Despite this revenue outperformance, the company faced an overall EBIT shortfall, leading to concerns among investors.
In response to these developments, Evercore ISI adjusted its price target for UPS from $103.00 to $97.00, while maintaining an "In Line" rating on the stock. The adjustment reflects cost concerns and broader market conditions that have affected investor sentiment. These recent developments highlight the challenges UPS faces in balancing revenue growth with profitability.
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