UPS 2026 Goals Rivals Wall Street's, Stock Falters

UPS unveiled ambitious 2026 targets, but investors aren't buying it. Here's the reasons why:

Big Numbers, Bigger Doubts

• Sales goal: $108-114 billion (Wall Street expects $101 billion) OK!
• Operating profit: $14.5 billion (analysts predicts $12 billion) Sounds Great!!
• Stock reaction: Initially up 2%, then fell 7.4% ... Not so good...

Why the Skepticism?

• History repeats? 2021 goals fell short due to economic headwinds
• "Better not bigger" strategy evolved to "better and bolder"
• Analysts cautious: Only 37% rate UPS stock as "Buy" (down from 53% last year)

Key Growth Drivers

• Healthcare logistics: $10 billion business in 2023
• Market share gains in targeted segments
• Pricing discipline and capital efficiency

Expert Take

Bernstein analyst David Vernon calls the targets "constructive" but warns they might be seen as "aspirational" by skeptics.

Challenges Ahead

• Labor costs remain a concern
• Economic uncertainty lingers
• 2024 earnings estimates down to $8.30 per share (from $12.34 last year)

CEO Carol Tomé's Vision "Better and bolder" strategy aims to:

1. Focus on core parcel delivery strengths
2. Expand global reach (e.g., Estafeta acquisition in Mexico)
3. Capitalize on nearshoring trends

"As the shift to nearshoring continues, our combined business will give customers in Mexico unprecedented access to global markets with seamless service and greater efficiency." Carol Tomé, UPS CEO

The Road Ahead

UPS faces a challenging landscape but bets big on its ability to adapt and grow. Will investors come along for the ride? Only time will tell.

Source: Barron's | Ari Levy/FreightCaviar