UBS raised its price target for United Parcel Service Inc. (NYSE: UPS) to $125.00 from $116.00 on Wednesday, keeping a Buy rating on the package delivery company despite trimming near-term profit expectations.
The firm lowered its first-quarter earnings projection for UPS to $1.12 per share from $1.38, attributing the reduction to a set of margin headwinds the company outlined. UBS highlighted three primary pressures: falling volume from Amazon, the migration of Ground Saver deliveries to the U.S. Postal Service, and higher aircraft lease expenses tied to replacing retired MD11 capacity.
UBS nonetheless signaled confidence in UPS’s longer-term outlook. The firm said the identified challenges should ease across 2026 and noted UPS expects a material year-over-year margin improvement in its domestic package operations during the second half of 2026. UBS characterized that trajectory as providing a "constructive backdrop" for the stock, while also warning that investors may need to be patient because the benefits are not expected until the latter half of 2026.
The logistics company carries a market capitalization of $90.95 billion and currently yields about 6.12% in dividend income. UBS also observed that UPS trades modestly below InvestingPro Fair Value estimates.
Recent quarter and analyst moves
UPS reported stronger-than-expected fourth-quarter 2025 results, with earnings per share of $2.38 versus a consensus forecast of $2.20, and revenue of $24.5 billion against an anticipated $24.01 billion. Those results prompted a variety of price-target adjustments from other brokerages.
- BMO Capital lifted its target to $110 from $105, citing robust U.S. Domestic performance.
- Truist Securities increased its target to $130 from $120 and described 2026 as a transition year for the company.
- Bernstein SocGen Group nudged its target to $128 from $125, pointing to margin improvement despite reduced volume and revenue.
- Raymond James slightly lowered its target to $127 from $128 but maintained a Strong Buy rating, referencing strategic changes to UPS’s network.
These analyst actions illustrate a mix of optimism about margin recovery and caution tied to near-term volume and cost challenges.
Investor considerations
From a financial perspective, the story centers on margin dynamics and timing. UBS’s decision to boost the price target while cutting short-term EPS reflects an expectation that the margin headwinds are transitory and that operating leverage will re-emerge as volumes stabilize and certain cost pressures abate. Yet the firm’s note that improvement is not expected until the latter half of 2026 underscores a multi-quarter horizon for tangible earnings enhancement.
Market participants tracking dividend income, logistics sector exposure, or exposure to domestic package margins should weigh the contrast between near-term softness and the projected second-half 2026 recovery when sizing positions.