Where Will UPS Stock Be in 1 Year?

Core Viewpoint - The outlook for United Parcel Service (UPS) is complex, with significant changes anticipated in the coming year, raising questions about share price and dividend sustainability, currently yielding 6.5% [1] Group 1: Financial Performance and Dividend Sustainability - The U.S. domestic package segment is crucial, accounting for over half of UPS's earnings and is expected to face significant changes in 2026 [2] - Wall Street analysts project free cash flow (FCF) of $5.3 billion in 2026 and $5.4 billion in 2027, indicating UPS may need to utilize cash reserves or incur debt to maintain its $5 dividend [2] - There are concerns regarding whether sustaining the dividend is the best use of shareholder resources, leaving little room for error [3] Group 2: Delivery Strategy and Market Dynamics - Management plans to reduce Amazon deliveries by 50% from early 2025 to the second half of 2026, focusing on more productive deliveries rather than volume growth [5] - The reduction in Amazon deliveries is expected to lower overall delivery volumes but potentially increase revenue per package, leading to margin expansion and profit growth [7] - The small- and medium-size business (SMB) market remains uncertain due to new tariffs and shifting supply chains, impacting UPS's growth prospects in this segment [6][7]