Core Viewpoint - A Citigroup analyst has lowered the price target for United Parcel Service (UPS) from $158 to $149 while maintaining a buy rating, indicating a 32% premium to the current price, suggesting that the recent sell-off presents a buying opportunity [1] Group 1: Financial Performance and Projections - UPS's stock declined following the fourth-quarter earnings presentation, not due to poor financials, but because of the announcement to reduce deliveries for Amazon by at least 50% by the second half of 2026, which accounted for 11.8% of UPS revenue in 2024 [2] - Management's guidance for 2025 revenue is projected at $89 billion, down from $91.1 billion in 2024, but adjusted operating profit is expected to grow by about 8% if margins expand as anticipated [3] Group 2: Strategic Changes and Opportunities - The reduction in Amazon deliveries allows UPS to replace low- or zero-margin deliveries with higher-margin opportunities in targeted end markets such as healthcare and small to medium-sized businesses [4] - This strategic shift aligns with UPS's "better not bigger" framework, focusing on maximizing profitability rather than merely increasing volume, indicating a misalignment with the previous relationship with Amazon [5] Group 3: Market Sentiment and Valuation - Investors are encouraged to welcome the changes while closely monitoring the execution of the new plan, as the stock trades at slightly more than 14 times analyst expectations for earnings in 2025, making the Citi price target appear reasonable [6]

When deciding whether to buy, sell, or hold a stock, investors often rely on analyst recommendations. Media reports about rating changes by these brokerage-firm-employed (or sell-side) analysts often influence a stock's price, but are they really important?Let's take a look at what these Wall Street heavyweights have to say about United Parcel Service (UPS) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.UPS currently has an average brokerage recommendati ...

Core Viewpoint - UPS' recent fourth-quarter earnings report highlighted significant strategic changes rather than just the financial numbers, leading to a sharp decline in stock price despite potential long-term value [1][6]. Strategic Changes - CEO Carol Tome identified three challenges that could cause UPS to "lose momentum" in the U.S. market, prompting pre-emptive actions [2]. - UPS plans to gradually reduce delivery volumes from Amazon to 50% of current levels by the second half of 2026, indicating a substantial decrease in revenue from this major customer [2]. - The company will also bring SurePost deliveries currently handled by USPS in-house, aiming for better control and efficiency [3]. Financial Guidance - For 2025, UPS expects revenue to decrease to $89 billion from $91.1 billion in 2024, while projecting an increase in non-GAAP adjusted operating profit margin from 9.8% to 10.8% [5]. - The implied non-GAAP adjusted operating profit is expected to rise from $8.9 billion to approximately $9.6 billion [5][4]. Market Reactions - The market reacted negatively to the news, with stock prices dropping and analysts lowering price targets due to skepticism about UPS' ability to execute its plans effectively [6]. Business Improvement Indicators - UPS has faced challenges from lower-than-expected small package delivery volumes and a costly labor dispute in 2023, but there are signs of improvement [7]. - The company is focusing on expanding deliveries to small and medium-sized businesses (SMBs) and healthcare, with SMB volume increasing to 28.9% of U.S. volume in 2024 [8][10]. - Healthcare-related volume grew by 5% to $10.5 billion in 2024, with a target of reaching $20 billion by 2026 [10]. Operational Metrics - UPS reported a favorable spread between revenue per piece (RPP) and cost per piece (CPP) in its U.S. domestic package segment, indicating improved operational efficiency [11]. - The RPP showed a 2.4% increase in the fourth quarter of 2024, while adjusted CPP increased by only 0.9% [12]. Investment Perspective - UPS' strategy to focus on higher-margin deliveries rather than volume aligns with its "better not bigger" approach, which is expected to yield positive results [13]. - The trailing price-to-earnings ratio of 14.1 and a dividend yield of 4.9% suggest that the stock may represent a good value opportunity despite execution risks [14].

Investment thesis: UPS (NYSE: UPS ) stock is trading at half the price it was trading at in 2022 at its all-time high. That in itself is not a signal to buy this stock. Looking at its financial results, its outlookAnalyst’s Disclosure: I/we have a beneficial long position in the shares of UPS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business r ...

President Trump's tariff actions rattled markets.After months of threatening to levy tariffs on imports from countries he blames for facilitating the flood of fentanyl into the U.S., on Saturday, President Donald Trump did just that. He announced the imposition of new 25% tariffs on imports to the U.S. from its top two trading partners, Mexico and Canada. The country's third biggest trading partner, China, got hit with a 10% increase in its tariffs as well. U.S. stock markets are reacting as you might expec ...

I am a self-taught individual investor and I have been investing in stocks for over 25 years. I focus on dividend growth investing with a long-term horizon since I believe in the compounding power of dividend growth investing. I generally look for undervalued large cap stocks with sustainable dividend growth and capital appreciation potential. My second focus is tech and small- or mid-cap stocks with or without dividends for their growth potential. I try to provide a little more in depth analysis weighing t ...

United Parcel Service (UPS) reported better-than-expected fourth-quarter 2024 earnings on Jan. 30. However, revenues fell short of the Zacks Consensus Estimate and the stock tumbled to a multi-year low of $109.62.The sharp decline was due to the decision to reduce business with its largest customer Amazon (AMZN) . To this end, UPS’ management announced that it has reached an agreement in principle with its largest customer to lower AMZN’s volume with UPS by more than 50% by June 2026.The Amazon news was mai ...

UPS truck is seen in Miami, United States on May 2, 2024. (Photo by Jakub Porzycki/NurPhoto via ... [+] Getty Images)NurPhoto via Getty ImagesUPS (NYSE: UPS) recently posted its Q4 results, with revenues missing and earnings exceeding the street estimates. It reported revenue of $25.3 billion and adjusted earnings of $2.75 per share, compared to the consensus estimates of $25.4 billion and $2.53, respectively. However, the company’s outlook fell short of expectations. UPS plans to lower volumes with Amazon ...

United Parcel Service Inc UPS reported mixed fourth-quarter results on Thursday.UPS reported consolidated revenue growth of 1.5% year-over-year to $25.301 billion, missing the consensus of $25.419 billion. Adjusted EPS was $2.75, up 11.3% YoY, above the consensus of $2.53."We are making business and operational changes that, along with the foundational changes we've already made, will put us further down the path to becoming a more profitable, agile and differentiated UPS that is growing in the best parts o ...

Market Overview - Major U.S. equities indexes moved higher, with the S&P 500 advancing 0.5%, the Dow up 0.4%, and the Nasdaq ending roughly 0.3% higher, driven by consumer spending despite a slight deceleration in GDP growth [2]. Company Performances - Vistra (VST) shares surged 13.6%, recovering from earlier losses, as optimism about its potential to power AI data centers contributed to a 330% increase over the past year [3]. - IBM (IBM) stock rose 13.0% after exceeding earnings and sales estimates for the fourth quarter, with strong revenue growth in its software business driven by AI demand [4]. - Las Vegas Sands (LVS) shares increased by 11.1% following a quarterly report that showed fourth-quarter sales exceeded estimates, despite softness in its Macao business [5]. - United Parcel Service (UPS) shares fell 14.1% after reporting lower-than-expected fourth-quarter sales and profits, alongside an agreement to cut Amazon delivery volumes by 50% [6]. - ServiceNow (NOW) shares dropped 11.4% after its fourth-quarter earnings release, where subscription revenue growth fell short of guidance [7]. - Comcast (CMCSA) shares decreased by 11.0% due to a wider-than-expected decline in broadband customers, despite beating profit and sales estimates driven by its Peacock streaming service [8].