Bank of America is pulling back on United Parcel Service on the heels of the shipping giant’s latest quarterly results. Analyst Ken Hoexter downgraded shares to neutral from buy and cut his price target to $98 from $115, which suggests almost 8% upside from Tuesday’s close. The move comes after UPS posted a decline in second-quarter earnings and revenue compared to the prior year. UPS adjusted earnings of $1.55 per share for the quarter missed the $1.56 per share that analysts polled by FactSet had expected. The company also said that it’s not providing its revenue or operating profit guidance for the full year “given the current macro-economic uncertainty.” Additionally, UPS noted a decline in shipments in its trade route to China – its most profitable – as a result of President Donald Trump’s tariffs. Shares fell more than 10% on Tuesday, putting its year-to-date decline at about 28%. UPS YTD mountain UPS, year-to-date Hoexter cited “a larger-than-expected small- to medium sized business (SMB) volume deceleration” due to the tariff pressures and “too much uncertainty to predict” the company’s outlook as reasons for the downgrade. On top of that, he highlighted a “slower-than than anticipated cost takeout, accelerating Amazon business glide-down (to 30% y-y declines in 2H from 13% in 1H), higher than expected Ground Saver costs (formerly SurePost), and delayed benefit from its voluntary driver separation program” as weighing on shares. Less than half of the analysts have a bullish view after earnings. Among the 32 analysts covering UPS, 15 have a strong buy or buy rating, according to LSEG. Fourteen, on the other hand, have a neutral stance. Its average target of almost $111 implies more than 22% upside potential.
