Raymond James has reduced its price objective for United Parcel Service Inc. (NYSE: UPS) to $127.00 from $128.00 while preserving a Strong Buy recommendation. The revised target remains notably above the present share price of $107.20, with InvestingPro data cited as indicating the stock is trading slightly below its Fair Value.
In its note, the firm highlighted two strategic initiatives it called "monumental moves": an agreement that halves UPS’s exposure to its largest customer and a redesign of the company’s U.S. network. Raymond James said these steps are producing short-term disruption but also delivering structural cost leverage that should support a more profitable future network for the package delivery business.
The analyst acknowledged a challenging recent period for UPS, referencing what it described as a "difficult post-COVID hangover." Despite that history, Raymond James pointed to valuation optics that it believes mitigate downside risk - the stock is trading at roughly 13 times the firm’s estimated 2027 earnings per share, a level the firm views as reflecting market skepticism.
Supporting the firm’s constructive stance, UPS has delivered a 6-month total price return of 9.39% and currently posts a price-to-earnings ratio of 16.31. Raymond James interprets those metrics as part of a positive risk/reward framework for investors given the company’s ongoing operational changes and management actions.
Separately, UPS reported fourth-quarter 2025 results that beat consensus expectations. The company posted earnings per share of $2.38 versus a forecast of $2.20, an 8.18% surprise. Revenue for the quarter came in at $24.5 billion, outpacing forecasts of $24.01 billion, a 2.04% surprise.
Following the earnings release, multiple analyst firms revised their price targets on UPS. Bernstein SocGen raised its target to $128 from $125 and maintained an Outperform rating, citing improved margins despite lower volume and revenue. BMO Capital increased its target to $110 from $105, noting strong performance in the U.S. Domestic segment. Truist Securities lifted its target to $130 from $120, kept a Buy rating, and characterized 2026 as a "transition year" for the company.
Raymond James’s commentary centers on the trade-off between near-term operational disruption and the potential for structurally lower costs and higher network profitability once the changes settle in. The firm’s view that much of the market’s skepticism is already priced into the stock underpins its decision to retain a Strong Buy stance even after a modest downward adjustment to the target.
Investors and market participants watching the Air Freight & Logistics sector and broader transportation and industrial markets will be tracking how the reduction in reliance on a single large customer and the U.S. network redesign influence volume, yield, and margin dynamics over coming quarters.