UPS Stock Under Pressure As Wall Street Weighs Amazon Shipping Cuts — But Retail Bulls Remain Unfazed

• Despite lower year-over-year operating margins, Goldman Sachs said better cost control and reduced Amazon-related volumes are improving UPS' profitability. 
• Evercore ISI raised its UPS price target to $118 while keeping an In Line rating, but warned that shipment volumes may recover slowly.
• Morgan Stanley remained cautious, citing uneven recovery trends and structural challenges. 

United Parcel Service Inc. (UPS) stock is on track for its worst weekly performance since March despite stronger-than-expected second-quarter (Q2) earnings, as investors focused on shrinking operating margins and a cautious outlook. While Goldman Sachs and Evercore ISI raised their price targets, Morgan Stanley warned that uneven parcel demand and persistent volume pressures could continue to weigh on the stock's recovery. 

UPS stock tumbled 7% on Tuesday to end at $105.53, logging its worst session in nearly three months. However, shares rose about 1% in extended trading. 

Goldman Sachs Sees Margin Recovery For UPS Despite Volume Headwinds 

Goldman Sachs increased its price target on UPS to $132 from $128 and reaffirmed its ‘Buy’ rating following the company's Q2 earnings, implying a 25% upside potential to the stock’s last closing price. The firm said higher domestic revenue generated per package and an adjusted operating margin around the midpoint of management's 7.5% to 8.5% guidance range contributed to the earnings beat.

UPS’ Q2 revenue of $22.8 billion and earnings per share of $1.76, both exceeded analysts’ consensus estimates of $21.8 billion and $1.66, respectively, according to Fiscal AI data. Q2 operating margin faced pressure, shrinking to 4.1% from 8.6% last year. Domestic adjusted operating margin was 8%. 

However, Goldman Sachs noted that growth in revenue per package exceeded the increase in cost per package during the quarter, indicating improving operating leverage. The firm added that initiatives implemented alongside the reduction in shipping volumes from Amazon (AMZN) appear to be supporting better profitability despite softer package demand.

UPS Volume Recovery May Take Time Despite Outlook Improvement 

Evercore ISI also nudged its price target higher, raising it to $118 from $117, implying an 11% upside from current levels, while maintaining an ‘In Line’ rating. UPS raised its full-year guidance for revenue, adjusted operating profit and earnings per share.

Even so, Evercore believes shipment volumes will likely remain under pressure until comparisons against reduced Amazon business become easier. The firm expects U.S. domestic average daily volume to remain lower than the prior year through the third quarter of 2027, while international average daily volume is not projected to return to year-on-year growth until the second quarter of 2026.

Morgan Stanley reaffirmed its ‘Underweight’ rating and $76 price target, suggesting a 27% downside from the stock’s last close. The firm explained that although investor sentiment toward the parcel industry has improved, UPS's modest increase to 2026 guidance suggests the recovery remains uneven. The firm said structural challenges across parcel markets continue to cloud the company's longer-term earnings pathway. 

UPS CEO Weighs In On Q3 Volume Outlook 

During the Q2 earnings call, UPS said it expects Q3 average daily volume to decline mid-single digits, reflecting a seasonal decline as well as the impact of this year's Amazon glide down, which completed in June. 

CEO Carol Tome explained in a Bloomberg interview, “If you ignore Amazon, we’ll actually grow volume in our U.S. business just like we did in Q2.”

UPS Stock: Retail View 

On Stocktwits, retail sentiment around the stock remained in ‘extremely bullish’ territory. 

A user said, “market reaction aside, the shift away from Amazon volume toward higher-margin business is encouraging. Could take a few more quarters, but the dividend looks solid and the bottom line should keep improving.”

Another user said, “The Amazon business was bad business. Anyone who doesn’t realize this shouldn’t be trading or investing. Any material risk has already been priced in at this point.”

UPS stock has gained over 6% year-to-date. 

Also See: CRML Stock Stares At Worst Month In Over A Year: CEO Defends Tanbreez Project — ‘China Needs To Be Beaten On REE Monopoly’

For updates and corrections, email newsroom[at]stocktwits[dot]com.