Shares of U.S. courier giant United Parcel Service (UPS) dropped over 5% on Tuesday, making it the worst performer on the S&P 500 index (SPX). The decline followed Bank of America analyst Ken Hoexter’s lowered earnings forecast for the current quarter. UPS stock also took a hit as the company announced plans to close two facilities in Kansas as part of its ongoing restructuring efforts. While these closures aim to streamline operations, investor sentiment remains cautious. Year-to-date, UPS shares have fallen 13%.
Overall, the U.S. Postal Service is undergoing major changes. Earlier this week, Postmaster General Louis DeJoy immediately resigned, signaling a significant leadership shift amid challenging market conditions. His resignation came weeks after President Donald Trump confirmed that his administration may let the Commerce Department take control of the independent postal service, which he has long criticized for financial struggles.
Bank of America (BofA) Slashes UPS Forecast
Four-star-rated Hoexter projects UPS earnings per share (EPS) of $1.31 for the first quarter ending March 31, which is 15% lower than his previous estimate. He attributed the downgrade to weaker demand driven by tariff uncertainties and winter weather disruptions.
Hoexter also expects UPS’s domestic parcel volume to shrink by 8% in the quarter, a sharper decline than his earlier forecast of a 5.7% drop. However, he pointed out that the company has not cut its operating costs sufficiently to offset the drop in parcel volumes. He noted that the company is reluctant to implement further structural cost reductions beyond its existing targets, as it anticipates the current slowdown in demand will be temporary.
UPS will report its first quarter results for 2025 on April 29.
Is UPS a Good Stock to Buy Right Now?
According to TipRanks, UPS stock has a Strong Buy consensus rating based on 11 Buys, seven Holds, and two Sells assigned in the last three months. At $134.0, the United Parcel Service average share price target implies a 22% upside potential.
