United Parcel Service announced earnings early Tuesday that beat views and revealed plans to cut 20,000 jobs. UPS stock, which trades near five-year lows, fell moderately.
Tuesday's report was UPS' first since President Donald Trump rolled out sweeping tariffs for dozens of countries. Those tariffs hit most heavily on China, which is UPS' largest market outside the U.S. China accounts for 5% of UPS' total sales, according to FactSet.
The Atlanta, Ga.-based company reported earnings of $1.49 per share, a slight increase over last year. Revenue came in at $21.5 billion, down from $21.7 billion a year ago. Analysts' consensus had projected earnings of $1.38 a share, according to FactSet. Sales were expected to fall 3.2% to $21 billion.
UPS declined to update its prior 2025 outlook, citing the macroeconomic uncertainty.
The company announced $3.5 billion in cost reductions for this year for a major network reconfiguration designed to expand U.S. operating margins. That will include cutting 20,000 jobs and shutting 73 buildings by the end of June. UPS said the cost reductions align with the decline in Amazon.com delivery volume.
Analysts Cut Price Target On UPS Stock
When it reported fourth-quarter results on Jan. 30, UPS stock gapped down 14% as sales slightly missed views and the company halved its business with Amazon.com. UPS executives hardly mentioned China or tariffs in the Q4 conference call with analysts.
Last week, Wells Fargo downgraded UPS stock to equal weight from overweight and cut the price target to 98 from 120. While optimistic about parcel pricing and the reduction of its network footprint, Wells analysts believe the reduction in Amazon deliveries has become more challenging to execute amid a weaker environment, according to TheFly.com. Moreover, analysts see elevated risk from tariffs.
Also last week, Truist cut its price target on UPS to 130 from 140 but maintained a buy rating. The firm said a muted backdrop adds to an effective recession in the transportation and logistics sector for over 30 months, according to TheFly.com. The industry tonnage index remained relatively stable in 2024 and into this year as demand for goods movement persisted. But pricing across the truckload market came under pressure, Truist said.
Of 34 analysts following UPS stock, 20 have buy or overweight ratings, 11 have hold ratings and three have placed sell ratings, according to FactSet.
See The Latest Updates To IBD Watchlists
UPS last week agreed to acquire Andlauer Healthcare Group, a Canada-based supply-chain management company that specializes in health care shipping. The deal — valued at about $1.6 billion — expands UPS' temperature-controlled logistics for medical customers.
UPS Stock In Downtrend
UPS stock reversed lower 1% Tuesday morning in heavy trading.
Shares had run into problems long before the tariffs hit. The stock peaked in February 2022 at 233.72 and still hasn't recovered from that year's bear market. Shares remain below the 50-day and 200-day moving averages amid a trend of lower lows and lower highs for more than a year.
UPS stock made a low at 90.55 on April 9 and has been trying to rebound since then. UPS has a woeful 16 Relative Strength Rating. The Composite Rating is 30.
UPS stock this month sank to its lowest level since May 2020.
