UPS Stock Has 32% Upside, According to 1 Wall Street Analyst

Core Viewpoint - A Citigroup analyst has lowered the price target for United Parcel Service (UPS) from $158 to$149 while maintaining a buy rating, indicating a 32% premium to the current price, suggesting that the recent sell-off presents a buying opportunity [1] Group 1: Financial Performance and Projections - UPS's stock declined following the fourth-quarter earnings presentation, not due to poor financials, but because of the announcement to reduce deliveries for Amazon by at least 50% by the second half of 2026, which accounted for 11.8% of UPS revenue in 2024 [2] - Management's guidance for 2025 revenue is projected at $89 billion, down from$91.1 billion in 2024, but adjusted operating profit is expected to grow by about 8% if margins expand as anticipated [3] Group 2: Strategic Changes and Opportunities - The reduction in Amazon deliveries allows UPS to replace low- or zero-margin deliveries with higher-margin opportunities in targeted end markets such as healthcare and small to medium-sized businesses [4] - This strategic shift aligns with UPS's "better not bigger" framework, focusing on maximizing profitability rather than merely increasing volume, indicating a misalignment with the previous relationship with Amazon [5] Group 3: Market Sentiment and Valuation - Investors are encouraged to welcome the changes while closely monitoring the execution of the new plan, as the stock trades at slightly more than 14 times analyst expectations for earnings in 2025, making the Citi price target appear reasonable [6]