Should You Buy UPS While It's Below $140?

Core Viewpoint - UPS is in a recovery phase in 2024, facing challenges such as declining delivery volumes and elevated costs, but potential for value exists as the company aims for a turnaround [1][2]. Financial Performance - UPS expects adjusted operating profit to decline by 20% to 30% in the first half of 2024 compared to the same period in 2023, with a projected increase of 20% to 30% in the second half [2]. - The company aims to cut $1 billion in costs and is reducing its workforce by 12,000 jobs, with cost-saving impacts expected to be more significant in the second half of 2024 [3]. Growth Strategy - UPS is focusing on higher-margin markets such as healthcare and small and medium-sized businesses (SMBs) to maximize profitability rather than just chasing volume [5]. - The company plans to invest in technology and automation to improve productivity and reduce costs, targeting an adjusted operating profit of $14.3 billion in 2026, up from $9.9 billion in 2023, representing an annualized increase of 13% [5]. Market Conditions - The U.S. small package delivery market is currently experiencing overcapacity, which poses a risk to UPS's revenue growth targets [5]. - If delivery volumes recover as expected, revenue per piece is anticipated to grow again, particularly due to the focus on healthcare and SMBs [6]. Investment Outlook - Analysts project UPS to generate $8.22 per share in 2024, increasing by 19.5% to $9.82 per share in 2025, suggesting a valuation of less than 14 times 2025 earnings [3]. - The stock is viewed as a potential buy, with the recommendation to start with a small position and monitor delivery volume trends closely [7].