Bernstein Raises UPS Target as Q4 Strength Offsets Margin Concerns

Core Viewpoint - United Parcel Service, Inc. (UPS) is undergoing significant restructuring to improve its cost base and focus on higher-margin business, particularly in light of declining volumes from its largest customer, Amazon [3][4]. Group 1: Financial Performance - Bernstein analyst David Vernon raised UPS's price target to $128 from $125, maintaining an Outperform rating, citing strong Q4 2025 results that exceeded expectations despite weaker margins [2]. - UPS's guidance for 2026 aligns with expectations, supported by better-than-expected revenue [2]. Group 2: Restructuring Efforts - UPS plans to eliminate up to 30,000 jobs and close 24 facilities in 2026 as part of its strategy to cut low-profit deliveries associated with Amazon [3]. - In 2025, UPS eliminated 48,000 jobs and closed operations at 93 buildings due to declining Amazon volumes, with further reductions expected to occur through attrition rather than layoffs [4]. Group 3: Market Context - The delivery industry is experiencing persistently soft demand, impacting UPS and competitors like FedEx [3]. - UPS expects revenue to decline in the first half of the year as it completes the transition away from Amazon deliveries, with an anticipated improvement in the second half [4].