Overview
TD Cowen has raised its 12-month price target on United Parcel Service (NYSE:UPS) to $115.00 from $101.00 while leaving its recommendation at Hold. The move comes as the firm highlights an improved margin profile and stronger network execution as key positives, even as it cautions that the first half of fiscal 2026 faces several headwinds.
Current market context
UPS traded at $106.22 at the time of the referenced update. InvestingPro analysis flagged the stock as appearing undervalued, noting that the shares have declined 15.4% over the past year despite a market capitalization of $90.06 billion.
Near-term challenges cited
TD Cowen pointed to several drivers of anticipated softness in early 2026: the company’s Amazon volume reduction, negotiations around postal agreements, and external trade pressures. The firm said these factors contribute to an expected weaker first half of the year for UPS.
Second-half outlook and operational levers
Despite the near-term pressures, TD Cowen expressed confidence that cost-cutting measures and deeper penetration into the small and medium-sized business segment should support results in the second half of 2026. The firm emphasized execution on expense reductions and improved mix as reasons for a more constructive medium-term view.
Earnings estimates and valuation
Following management’s updated guidance, TD Cowen adjusted its fiscal 2026 earnings per share estimate to $7.15 and published a 2027 EPS estimate of $7.95. The 2026 EPS projection closely mirrors consensus estimates, which InvestingPro reports at $7.14 for the fiscal year.
TD Cowen said UPS’s fiscal 2026 guidance implies EPS roughly in line with consensus but with signs of an improved margin structure and less intense capital expenditure requirements. The research house also identified potential upside if international headwinds ease.
Reflecting the improved margin outlook and product mix, TD Cowen raised the valuation multiple it applies by 1.5 turns to 14.5x and shifted its valuation focus more toward 2027 results. By comparison, the company’s shares are trading at a trailing P/E of 16.31 and yield 6.12%.
Dividends and balance sheet notes
InvestingPro data cited in the update notes that UPS has paid dividends for 27 consecutive years and operates with a moderate level of debt, underlining a degree of financial stability while the company executes strategic changes.
Recent earnings and analyst activity
In recent results, UPS reported adjusted fourth-quarter 2025 earnings per share of $2.38, topping both Stephens’ and consensus estimates of $2.20. The outperformance was attributed to strong pricing, although shipping volumes fell slightly short of expectations.
Several other broker actions and price-target moves were noted in the firm’s overview. HSBC upgraded its rating on UPS to Buy, pointing to greater visibility on volume and a margin recovery expected in the latter half of 2026. UBS increased its price target to $125.00 and retained a Buy rating even after trimming its first-quarter earnings forecast due to margin pressures. Stephens moved its target to $115.00 and kept an Equal Weight rating. Raymond James modestly lowered its target to $127.00 while underscoring strategic network changes and reduced dependence on UPS’s largest customer. Bernstein SocGen lifted its target to $128.00, calling out improved margins as UPS reduces costs associated with uneconomic Amazon volume.
What this means for the market
The string of analyst revisions reflects evolving views on UPS’s ability to rework its cost structure and customer mix. Brokers are balancing near-term top-line and volume pressures against a view that margin improvement, capex moderation, and SMB growth can support earnings recovery in the back half of 2026 and into 2027.
Note: This article reports on analyst estimates, company guidance, and recent earnings as presented in the cited analyst updates and InvestingPro figures. It does not include recommendations or new forecasts beyond those provided by the brokers referenced.