United Parcel Service: Market Ratings Downgraded

The article discusses a ratings downgrade for United Parcel Service (UPS) by a finance expert who previously initiated a buy rating on the company in April. The expert believes that the stock is now too cheap to ignore and that Mr. Market is right in downgrading its ratings.

United Parcel Service (UPS) has recently faced a ratings downgrade by a prominent financial expert, who previously initiated a buy rating on the company. The expert now believes that the stock is fairly valued and that Mr. Market is right in downgrading its ratings. This shift in sentiment comes amidst a period of poor financial performance and market uncertainty.

In the second quarter of 2025, UPS reported consolidated revenues of $21.2 billion, a decline of 2.54% year-over-year (YoY). The company's revenue growth has been deteriorating for three consecutive quarters, with the latest quarter showing a significant drop in demand, particularly in the U.S. Domestic segment. Despite a 5.5% YoY increase in revenue per piece, overall revenues declined by 0.8%, indicating weak business activity [2].

The company also experienced a decline in earnings per share (EPS), with the consensus now expecting a 14.66% fall in the bottom line for the fiscal year 2025. Cash flows are also a concern, with the company pulling its guidance and analysts expressing a highly unfavorable outlook. The expert notes that the fundamentals have taken a turn for the worse, and the stock is now fairly valued despite recent multiple contractions [2].

The expert's initial buy rating was based on the stock's undervaluation and excessive pessimism. However, the recent earnings miss and the company's failure to provide guidance have led to a significant decline in stock price. The expert now believes that the stock is fairly valued and recommends a hold rating at best.

Despite the downgrade, UPS continues to face challenges, including trade policy uncertainties and tariff changes that have negatively impacted its international trade lanes. The company has been making strategic shifts, such as doubling capacity between India and Europe, to mitigate these impacts. However, the expert acknowledges that these efforts may not yield immediate results, and the business turnaround is not coming easily.

In conclusion, the recent ratings downgrade for UPS reflects a shift in market sentiment and a recognition of the company's current financial challenges. While the stock remains undervalued in some respects, the expert believes that it is now fairly valued and recommends a hold rating. Investors should closely monitor UPS's progress in addressing its challenges and the broader economic conditions that may impact its performance.

References:
[1] https://seekingalpha.com/article/4817104-ups-the-selloff-has-gone-too-far
[2] https://seekingalpha.com/article/4817178-ups-mr-market-is-right-ratings-downgrade