On Thursday, HSBC adjusted its target on United Parcel Service shares(NYSE:UPS), revising it to $150 from the previous $155, while keeping a Hold rating. The revision reflects a lowered multiple due to a continued de-rating of the company's valuation.
This change comes after the stock experienced an 8% decline on Wednesday, which was attributed to growing skepticism about UPS's ability to meet its fiscal year 2026 objectives and the possibility of a reduced dividend.
The firm believes that UPS is likely to fall short of its historical operating margin performance. This outlook is based on several factors, including a challenging macroeconomic environment, increased competition, particularly from Amazon (NASDAQ:AMZN), and rising costs. These headwinds are expected to impact the company's financials and have been factored into the revised price target.
The analyst's comments highlight concerns about UPS's future earnings potential in light of these challenges. The company's stock performance on Wednesday indicates that investors may share these concerns, as reflected in the significant drop in share value.
Despite these worries, HSBC has chosen to maintain its Hold rating on UPS. This suggests that while the firm anticipates certain difficulties for UPS, it does not necessarily advise against holding the stock at this time.
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