UPS (UPS) Stock Forecast & Price Target

United Parcel Service (UPS) demonstrated solid resilience in its financial performance, with adjusted operating margin expanding to 10.3%, reflecting disciplined cost management and an improved business mix despite contracting revenue. The company's consolidated revenues of $24.5 billion surpassed previous guidance, and the operating margin of 11.8% exceeded the expected range, highlighting the effectiveness of ongoing operational efficiencies. UPS is well-positioned for future growth, with expectations for domestic operating profit to rebound and an anticipated increase in revenue per package, underscoring strong potential within its higher-margin sectors such as small-to-medium business (SMB) and healthcare.

The negative outlook on United Parcel Service's stock is primarily driven by a projected decline in adjusted operating margins, which are anticipated to stabilize in the mid-teens, reflecting a shift toward a normalized trade environment. Additionally, the company's domestic package revenue has experienced a year-over-year decline of 3.2%, compounded by lower forwarding revenues and a significant downturn in international volumes influenced by trade policy changes and reduced U.S. imports. This challenging landscape is anticipated to continue early in FY26, with flat revenue expectations and declining operating profits exacerbated by decreased volume from major clients such as Amazon.