UPS Stock Slides 9% This Week Even as Amazon Overhaul Pays Off

Key Stats for UPS Stock

• Past week’s performance: -8.9%
• 52-week range: $82 to $122
• Valuation model target price: $136
• Implied upside: 30.5% over 2.4 years

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A Beat and Raise the Market Shrugged Off

United Parcel Service (UPS) fell roughly 9% this week, even though the company beat second-quarter estimates and raised full-year guidance. Adjusted earnings per share came in at $1.76 versus expectations near $1.66, while revenue rose 6% to $22.8 billion. On paper, that’s a strong quarter. Investors reacted differently.

Skepticism centers on UPS’s flat third-quarter forecast and doubts whether improved margins can hold once the Amazon reduction is fully behind it. Shares initially rallied on the guidance raise but reversed as analysts pressed management on future growth without that clear tailwind.

CEO Carol Tomé told analysts the company had completed its 18-month effort to shrink lower-margin Amazon volume “exactly as designed,” eliminating about 2 million packages per day and roughly $4.5 billion in related costs. Domestic operating profit jumped 21% to $1.2 billion, and the U.S. margin improved a full percentage point from a year earlier.

Healthcare logistics and small business shipments are now the growth engines UPS is leaning on instead. Tomé said healthcare revenue topped $3 billion for a second straight quarter, calling UPS the only carrier offering true end-to-end healthcare logistics with its own assets. Going forward, whether that new mix can offset the lost Amazon scale is the question keeping a lid on the stock this week.

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Is UPS Stock Undervalued?

Under valuation model assumptions realized through 12/31/28, the stock is modeled using:

• Revenue Growth (CAGR): 3.4%
• Operating Margins: 10.2%
• Exit P/E Multiple: 13.5x

Based on these inputs, the model estimates a target price of $136, implying 30.5% upside and an 11.6% annualized return by the end of 2028.

UPS doesn’t look expensive by historical standards, trading at an NTM P/E near 13.5x against a Street target of about $116. But the market is clearly waiting for confirmation that margin gains are structural rather than a one-time byproduct of shedding Amazon volume.

The case for cheap hinges on execution. Management pointed to automation as the real driver of margin durability, noting that 68.5% of U.S. volume now flows through automated buildings that cost 28% less to run than non-automated ones. If that ratio keeps climbing, cost per piece should keep falling even as Amazon-related savings fade from year-over-year comparisons.

The offsetting risk is revenue growth, which remains the weakest link in the story. UPS’s own three-year revenue CAGR has been negative, and this year’s forecast implies modest single-digit growth at best. That’s why the stock is better framed as a margin recovery and capital return story rather than a growth story, and it explains the market’s cautious reaction to otherwise solid results.

The chart that best fits this section is a five-to ten-year operating margin trend, since it shows how far domestic margins fell during the pandemic-era overbuild and how much room remains before UPS reclaims its prior peak profitability.

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UPS vs. FedEx: The Margin Race

FedEx (FDX) is UPS’s most direct comparison, and the two companies are taking different paths to the same goal of higher margins. FedEx recently guided for an 11% revenue increase in 2026 after its own fourth-quarter profit gain, driven largely by pricing strength, ahead of the 3.4% forward revenue growth UPS’s own valuation model assumes over the next two years.

On margins, UPS’s domestic operating margin sits at 8% this quarter, while FedEx has publicly targeted mid-teens margins across its ground network longer term, showing UPS still has ground to make up even after this quarter’s 100 basis point improvement. UPS’s international segment, by contrast, posted a stronger 12.5% revenue increase in Q2, helped by an 18.9% jump in revenue per piece.

Amazon remains the wildcard for both. UPS said Amazon now represents just 9% of its revenue, down from over 13% at the peak, and management downplayed concerns that Amazon’s own logistics network, which opened to outside businesses in May, is stealing volume. That claim will be tested as Amazon’s in-house delivery capacity continues to expand.

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What’s Driving UPS Stock Going Forward?

The clearest near-term catalyst is whether UPS can grow revenue again once the Amazon comparisons normalize later this year. Management’s guidance for flat third-quarter revenue suggests the company isn’t promising a quick reacceleration, so investors will be watching for any sign that small business and healthcare volumes are scaling fast enough to offset the smaller Amazon base.

Automation investment is the second major theme. UPS plans to keep expanding automated capacity and radio-frequency identification tracking across its network, both of which management says are central to sustaining the margin gains booked this quarter. The company also added 27 temperature-controlled cross-dock facilities to support its growing cold-chain healthcare business.

Broader freight demand and consumer spending trends will also matter. UPS’s Supply Chain Solutions segment grew 7.8% in Q2, helped by forwarding and logistics revenue, and any pickup in global trade volumes could provide upside beyond what management has already guided. Persistent tariff uncertainty, however, remains a risk factor the company flagged as an ongoing consideration.

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Should You Invest in United Parcel Service?

The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.

Pull up UPS, and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.

You can build a free watchlist to track UPS alongside every other stock on your radar. No credit card required. Just the data you need to decide for yourself.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!