UPS Faces Market Challenges Despite Strong Q4 Report

With a market cap of $99.8 billion, United Parcel Service, Inc. (UPS) stands as the world’s largest express carrier and package delivery company, specializing in transportation and logistics services globally. Headquartered in Atlanta, Georgia, UPS operates mainly through two segments: U.S. Domestic Package and International Package. These segments offer time-definite air and ground delivery services, ensuring efficient movement of millions of shipments daily.

Classified as a “large-cap” stock, UPS fits into the category of companies valued at $10 billion or more. The company manages a substantial ground fleet that includes package cars, vans, tractors, and motorcycles. Alongside package delivery, UPS also provides freight forwarding, customs brokerage, healthcare logistics, and e-commerce solutions.

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Recently, however, the package delivery service has seen a decline of 26.5% from its 52-week high of $158.95 reached in March 2024. In addition, UPS shares have fallen 8.1% over the last three months, underperforming compared to the Nasdaq Composite’s ($NASX) decrease of 7.4% during the same timeframe.

Over the long term, UPS has seen a 7% dip on a year-to-date basis, lagging behind the NASDAQ’s 5.3% decrease. Over the past 52 weeks, United Parcel Service’s stock has dropped 21.7%, while the NASDAQ has posted a 12.8% gain. Notably, UPS has remained primarily below its 50-day and 200-day moving averages since last year.

Despite reporting a better-than-expected Q4 2024 adjusted EPS of $2.75, UPS stock plummeted 14.1% on January 30. This drop was triggered by the company’s weak revenue forecast of $89 billion for 2025, significantly below Wall Street’s expectations. The situation was worsened by UPS’ announcement of a major volume reduction agreement with Amazon, its largest customer, aiming to cut Amazon-related shipments by more than 50% by 2026.

Adding to the challenges, Q4 2024 revenue of $25.3 billion fell just short of estimates. The Supply Chain Solutions Segment experienced a 9.1% revenue drop due to the sale of Coyote Logistics, raising concerns among investors.

In contrast, rival FedEx Corporation (FDX) has shown relative strength, managing a slight increase over the past 52 weeks. However, FedEx shares have still decreased 11.1% year-to-date, trailing behind UPS.

Despite the setbacks for UPS, analysts maintain a moderately optimistic view on the company’s future. Among the 26 analysts covering the Stock, the consensus rating stands at “Moderate Buy,” with shares currently trading below the mean price target of $134.28.

On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.