UPS Stock Rating Maintained at Neutral by JP Morgan: Price Target Downgraded to $107.00

JP Morgan maintains its "Neutral" rating on UPS, but lowers the price target from $110 to $107, reflecting a 2.73% decrease. The average target price for UPS is $113.93, with an estimated upside of 10.79% from the current price. The estimated GF Value for UPS in one year is $148.37, suggesting a 44.27% upside from the current price.

United Parcel Service (UPS) and its rival FedEx are both taking significant steps to reduce costs in response to weak demand and high labor costs. UPS, the world's largest package delivery company, has announced a voluntary buyout program for its delivery drivers, a first in its 117-year history. This move is part of a broader cost-cutting initiative that includes trimming its workforce by 20,000 and shutting down 73 facilities [1].

The decision to offer buyouts to delivery drivers comes as UPS navigates an "unprecedented business landscape," according to the company's statement. The buyout package is in addition to any retirement benefits such as pension and healthcare. UPS has also reached an agreement with Amazon to reduce the latter’s volume by more than 50% by June 2026, as Amazon was not its most profitable customer [1].

FedEx, on the other hand, is also cutting costs through its DRIVE program and Network 2.0 initiative. The company expects to achieve $1 billion in transformation-related savings in fiscal 2026, which includes a further $2.2 billion in cost savings in fiscal 2025 [1].

JP Morgan has maintained its "Neutral" rating on UPS but lowered its price target from $110 to $107, reflecting a 2.73% decrease. The average target price for UPS is $113.93, with an estimated upside of 10.79% from the current price. The estimated GF Value for UPS in one year is $148.37, suggesting a 44.27% upside from the current price [2].

Despite these cost-cutting measures, UPS shares have declined by nearly 24% in the past year, underperforming its industry. The company's valuation is considered expensive compared to industrial levels, with a 12-month forward price-to-earnings ratio of 13.91X. The Zacks Consensus Estimate for UPS’ 2025 and 2026 earnings has been revised downward over the past 30 days [1].

Both UPS and FedEx are facing significant challenges, but their cost-cutting initiatives aim to address the issues of high labor costs and weak demand. Investors will be closely watching how these measures impact the companies' financial performance and stock prices.

References:
[1] https://www.theglobeandmail.com/investing/markets/stocks/AMZN/pressreleases/33252817/ups-looks-to-cut-costs-to-mitigate-demand-woes-whats-the-road-ahead/
[2] https://www.zacks.com/stock/quotes/UPS