UPS Volume Outlook Improves Modestly in Bank of America Update

Core Viewpoint - United Parcel Service, Inc. (NYSE:UPS) is recognized for its potential as a dividend achiever, despite facing challenges in volume and maintaining an Underperform rating from Bank of America [1][2]. Group 1: Volume Outlook - Bank of America analyst Ken Hoexter raised the price target for UPS to $99 from $95 while maintaining an Underperform rating [2]. - UPS anticipates a decline of approximately 11% in US domestic average daily package volumes year over year for Q4, an improvement from the previous estimate of a 13% drop [2]. - The firm slightly increased its Q4 EPS estimate by 1%, while the fiscal 2026 EPS forecast remains unchanged at $7.10 [2]. Group 2: Automation Investment - UPS plans to invest around $120 million in 400 robots designed for unloading trucks, as part of a broader $9 billion automation strategy aimed at reducing labor costs and improving margins [3][6]. - The automation initiative is expected to generate $3 billion in cost savings by 2028, covering over 60 U.S. facilities [6]. - The robots, developed by Pickle Robot Co., will be deployed across multiple facilities starting in the second half of 2026 and continuing into 2027 [5][6]. Group 3: Industry Context - Truck and container unloading remains largely manual across the industry, creating bottlenecks in warehouse operations [4]. - Pickle Robot Co., which has raised approximately $97 million since its founding in 2018, is a key player in this automation effort [4].