UPS Plans to Cut Amazon Deliveries by 50% by 2026 Amid Growth Strategy
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Source: Fool
- Long-Term Growth Outlook: UPS plans to reduce Amazon's delivery volume by 50% by 2026, focusing on high-margin healthcare logistics and small to medium enterprises (SMEs), which is expected to enhance profitability and strengthen its position in the competitive delivery market.
- Healthcare Revenue Surge: UPS's healthcare revenue has grown from $5 billion in 2016 to $10 billion in 2023, with a target of $20 billion by 2026, bolstered by its strategic $1.6 billion acquisition of Andlauer Healthcare Group.
- Investment in Automation: Ongoing investments in automation and smart facilities aim to improve delivery network efficiency, facilitating a $3.5 billion reduction in structural costs and enhancing overall profitability.
- Near-Term Risks: Despite a positive long-term outlook, UPS faces near-term risks from a sluggish U.S. manufacturing sector and rising inventory replacement costs for SMEs, with projected free cash flow of $4.6 billion in 2025, insufficient to cover the annual dividend of approximately $5.5 billion.
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: 108.620
Low
80.00
Averages
107.06
High
126.00
Current: 108.620
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.
