UPS Cuts Package Deliveries for Amazon by 2 Million Daily
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 days ago
0mins
Should l Buy UPS?
Source: NASDAQ.COM
- Delivery Reduction: UPS plans to cut its daily package deliveries for Amazon by 2 million, indicating a strategic shift away from low-margin business, which may lead to a short-term revenue decline.
- Profit Focus: By shifting its focus to healthcare logistics and small to medium-sized businesses, UPS aims to enhance its long-term profitability, as these segments offer higher margins compared to Amazon deliveries.
- Market Competition: In contrast to UPS, the USPS has struck a deal with Amazon to deliver around 1 billion packages annually, highlighting increased competition in the logistics market, which could impact UPS's market share.
- Revenue Outlook: Although UPS expects its revenue in 2026 to rise only 1.1% from last year's $88.7 billion, the company prioritizes margin expansion over revenue growth, reflecting confidence in its future profitability.
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Analyst Views on UPS
Wall Street analysts forecast UPS stock price to rise
19 Analyst Rating
9 Buy
9 Hold
1 Sell
Moderate Buy
Current: 103.570
Low
80.00
Averages
107.06
High
126.00
Current: 103.570
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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- UPS's High Turnaround Costs: UPS is undergoing a business restructuring, and while facing revenue declines, the capital investments in new equipment are expected to lead to an inflection point in 2026, showing signs of improvement.
- UPS's Increased Attractiveness: Compared to 3M, UPS's price-to-sales, price-to-earnings, and price-to-book ratios are below their five-year averages, and with a 6.3% dividend yield, it presents a more attractive investment option, especially for dividend investors.
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- UPS's Restructuring Progress: UPS is undergoing a business turnaround that involves significant upfront capital investments to enhance equipment, leading to revenue declines; however, revenue per piece in the U.S. market is rising, and 2026 is expected to be a pivotal year for growth.
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- Valuation Target and Market Impact: Seeking a $1.75 trillion valuation for its IPO, SpaceX could become the largest IPO in history and quickly rank among the top ten public companies globally; however, historical data suggests that large IPO stocks often underperform in the long term.
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- Historical Performance Warning: Historical data shows that stocks with large IPO valuations typically perform poorly post-listing, with average returns of -13% over three months and -12% over one year, potentially leading prospective investors to adopt a cautious stance on SpaceX's long-term performance.
- Market Reaction Expectations: Although SpaceX's IPO is highly anticipated and may see a surge in stock price on its debut, the historically low long-term returns of large IPO stocks suggest that investors should remain on the sidelines and look for optimal buying opportunities amid market fluctuations.
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