UPS launches cost-cutting plan amid market strength
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 08 2025
0mins
Should l Buy UPS?
United Parcel Service Inc (UPS) saw its stock price increase by 3.00%, reaching a 20-day high. This rise comes as the broader market, with the Nasdaq-100 up 0.96% and the S&P 500 up 0.64%, reflects positive investor sentiment.
The surge is attributed to UPS's announcement of a cost-cutting plan aiming for $3.5 billion in annual savings, which includes closing 73 facilities and shifting package volume away from Amazon. This strategic transformation indicates early success in improving operational efficiency and financial performance, despite previous revenue declines.
The implications of this plan suggest that UPS is positioning itself for a stronger competitive stance in the logistics sector. With a focus on higher-margin customers and significant cost reductions, the company may enhance its profitability and attract more investor interest, especially given its current high dividend yield.
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Analyst Views on UPS
Wall Street analysts forecast UPS stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for UPS is 107.06 USD with a low forecast of 80.00 USD and a high forecast of 126.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
19 Analyst Rating
9 Buy
9 Hold
1 Sell
Moderate Buy
Current: 116.550
Low
80.00
Averages
107.06
High
126.00
Current: 116.550
Low
80.00
Averages
107.06
High
126.00
About UPS
United Parcel Service, Inc. provides a range of integrated logistics solutions for customers in more than 200 countries and territories. Its U.S. Domestic Package segment offers a range of United States domestic air and ground package transportation services. Its air portfolio offers time-definite, same-day, next-day, two-day and three-day delivery alternatives as well as air cargo services. Its ground network enables customers to ship using its day-definite ground service. UPS SurePost provides residential ground service for customers with non-urgent, lightweight residential shipments. Its International Package segment consists of small package operations in Europe, Indian sub-continent, Middle East and Africa, Canada and Latin America and Asia. It offers a selection of guaranteed day- and time-definite international shipping services. Its supply chain solutions consist of forwarding, logistics, customized third-party logistics and specialized cold chain transportation solutions.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Surge in Layoff Plans: January 2026 saw the highest layoff plans since 2009, indicating a severe job market situation that could lead to further economic deterioration, impacting consumer confidence and spending.
- Weak Job Additions: The private sector added only 22,000 jobs, significantly lower than the 140,000 added during the same period last year, suggesting a sluggish economic recovery that may lead to decreased household income and consumer spending.
- Increase in Unemployment Claims: Initial claims for unemployment benefits unexpectedly rose to 231,000 in the last week of January, reflecting the impact of severe winter weather on the job market, potentially exacerbating economic uncertainty.
- Disconnection Between Growth and Employment: Despite GDP growth reaching an annual rate of 4.4% in Q3 last year, challenges remain for low-income households, highlighting a “K-shaped” recovery that may exacerbate social inequality.
See More
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- Director Resignation Announcement: Kevin Warsh, nominated by Trump for the Federal Reserve chair, will resign from his position on UPS's board if confirmed by the Senate, indicating his commitment to the new role.
- No Disagreement in Resignation: UPS's SEC filing clarifies that Warsh's resignation is not due to any disagreements regarding the company's operations, policies, or practices, reflecting a positive relationship with UPS.
- Market Reaction Monitoring: Warsh's resignation could impact shareholder confidence in UPS, although there are currently no indications that this move will directly affect the company's operations.
- Future Outlook: As Warsh is poised to potentially lead the Federal Reserve, the market will closely watch his influence on monetary policy, with UPS, as a major corporation, likely to experience indirect effects from policy changes.
See More
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- Capital Flow Changes: Goldman Sachs equity strategist Ben Snider indicates that capital is rotating towards sectors perceived as insulated from AI disruption, marking a clear departure from last year's market strategies and reflecting diminished investor confidence in AI themes.
- Cyclical Industry Rally: Despite software stocks experiencing one of their worst weeks since the 2022 rate-hike panic, cyclical and consumer-linked industries have continued their recent rallies, indicating a growing preference for traditional sectors among investors.
- Strong Dow Jones Performance: Amid the decline in software stocks, the Dow Jones Industrial Average has rallied towards all-time highs, suggesting increased investor confidence in industries tied to physical assets and cyclical activity, further emphasizing the market's demand for safety from AI-driven productivity risks.
See More
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- Economic Slowdown Signals: While official data suggests a resilient labor market, private reports are raising early warning flags, indicating weakening growth and disinflation that could lead the Federal Reserve to ease policy.
- Bitcoin Price Movement: Bitcoin surged 6%, bouncing from support levels of $60,000-$62,000, but faces critical resistance at $75,000-$80,000, which, if broken, could restore market confidence.
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- Profitability Improvement: The adjusted earnings per share of $2.38 surpassed Wall Street's forecast of $2.20, indicating positive progress in enhancing margins, which may attract more investor interest moving forward.
- Reducing Amazon Deliveries: UPS is cutting back on deliveries for Amazon, a move that may be controversial but is aimed at strengthening margins, aligning with CEO Carol Tome's strategic goals to enhance long-term competitiveness.
- Stock Price Recovery: As of early 2026, UPS shares have risen 17%, with a more than 37% increase over the past six months, significantly enhancing the stock's investment appeal driven by profitability and sustainable growth, while trading at a reasonable 15 times estimated future earnings, indicating further upside potential.
See More
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- Strategic Adjustments: FedEx is spinning off its freight segment to focus on ground and air shipments, with CEO Raj Subramaniam stating successful execution of its growth strategy, whereas UPS is shrinking to enhance profit margins, resulting in lost market share.
- Layoff Impact: UPS plans to lay off 30,000 workers in response to reduced Amazon shipment volumes, which may boost average revenue per delivery but will significantly hinder revenue growth in the short term.
- Profit Margin Changes: FedEx's net income grew by 29% year-over-year in the most recent quarter, while UPS only saw a 4.1% increase, indicating FedEx's leading position in margin expansion despite UPS's higher valuation.
See More
