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Atlanta, Georgia-based United Parcel Service, Inc. (UPS) is a package delivery company that provides transportation and delivery, distribution, contract logistics, ocean freight, air freight, customs brokerage, and insurance services. Valued at a market cap of $97.5 billion, the company operates through two segments, U.S. Domestic Package and International Package.
This package delivery company’s shares have massively underperformed the broader market over the past 52 weeks. UPS has declined 22.5% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 20.5%. Moreover, the stock is down 9.4% on a YTD basis, compared to SPX’s 2.9% rise during the same time frame.
Zooming in further, United Parcel Service’s underperformance becomes more evident when compared to the Industrial Select Sector SPDR Fund’s (XLI) 17.6% return over the past 52 weeks and 4.6% gain on a YTD basis.
On Jan. 30, shares of UPS crashed 14.1% after delivering a mixed Q4 performance. The company's adjusted earnings of $2.75 per share improved 11.3% year-over-year and easily exceeded the Wall Street estimates of $2.52. However, its revenue, which advanced 1.5% from the year-ago quarter to $25.3 billion, slightly fell short of the forecasted figure.
The top-line miss can be primarily attributed to a decline in Supply Chain Solutions revenue, mainly fueled by the divestiture of Coyote. What disappointed investors the most was UPS' lackluster fiscal 2025 revenue view. The company expects revenues to come in at $89 billion, way below the consensus estimates.
For the current fiscal year, ending in December, analysts expect United Parcel Service’s EPS to grow 3.5% year over year to $7.99. The company’s earnings surprise history is mixed. It beat the Wall Street estimates in three of the last four quarters while missing on another occasion.
Among the 26 analysts covering the stock, the consensus rating is a “Moderate Buy,” which is based on 16 “Strong Buy,” eight “Hold,” and two “Strong Sell” ratings.
This configuration is modestly more bullish than three months ago, with 14 analysts suggesting a “Strong Buy” rating.
On Jan. 22, Evercore ISI maintained an “In Line” rating on UPS and raised its price target to $147, which indicates a 28.7% potential upside from the current levels.
The mean price target of $134.28 represents a 17.5% upside from United Parcel Service’s current price levels, while the Street-high price target of $179 suggests an upside potential of 56.7%.
