UPS (UPS) Stock Forecast & Price Target

United Parcel Service (UPS) demonstrated resilience in its financial performance, with an adjusted operating margin expansion to 10.2%, indicating strong cost management and an improved business mix despite revenue contraction. The company’s consolidated revenues reached $24.5 billion, surpassing previous forecasts, while the sequential adjusted operating margin also improved to 11.8%, reflecting operational efficiency. Furthermore, UPS anticipates a return to domestic operating profit growth in the second half of the year, supported by a leaner cost structure and robust performance in higher-margin sectors such as small-to-medium business (SMB) and healthcare.

The analysis indicates a negative outlook for United Parcel Service (UPS) due to a projected decline in adjusted operating margins, which are expected to stabilize in the mid-teens, reflecting a more normalized trade environment rather than previous peak performance. Domestic package revenue has experienced a year-over-year decline of 3.2%, driven by lower profitability in forwarding and logistics segments, with adjusted operating profit decreasing by 14.5%, primarily due to trade policy changes affecting higher margin import flows. Additionally, the international segment is confronting significant challenges, with total volumes down 4.7% and a notable 12.7% revenue drop in forwarding services, exacerbated by declines in US imports from major trading partners.