Al Root
Shares of shipper United Parcel Service were having a bad day Tuesday, and while there is one thing to pin declines on, it didn't appear to be a big deal.
UPS stock was down 4.4% in midday trading, while the S&P 500 and Dow Jones Industrial Average were up less than 0.1%.
It was a sleepy day for markets overall, so what gives?
BofA analyst Ken Hoexter cut his price target by $4 to $129 from $133 a share. It's a 3% change.
Still, one small adjustment doesn't typically lead to a relatively significant drop. UPS has almost 40 analysts covering its shares. The $4 cut moved the average price target by less than 20 cents. What's more, he kept his Buy rating on the stock.
He also cut his first-quarter earnings per share estimate from $1.55 to $1.31, citing weak volumes and tariff uncertainty. That sounds bad, but investors heard the same from FedEx this past week when it reported fiscal third-quarter numbers. FedEx stock dropped 6.5% after earnings.
FedEx stock bounced and, through midday trading Tuesday, was down about 2% from pre-earnings levels. UPS shares were down about 5%.
UPS has been hit harder than FedEx shares.
Starting points don't seem to help explain Tuesday's drop. Through midday trading, UPS stock was down 29% over the past 12 months, and FedEx stock was down 14%.
UPS stock is a little more expensive, trading at about 14 times earnings estimated over the coming 12 months. FedEx stock trades for about 12 times.
Whatever the reason for Tuesday's drop, recent trading in UPS stock shows investors are nervous about a weakening economy.
Overall, 60% of analysts covering UPS stock rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for UPS stock is about $132 a share, up 19% from recent levels.
For FedEx, 61% of analysts rate shares Buy, and the average price target is about $242, up 18% from recent levels.
Write to Al Root at allen.root@dowjones.com
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March 25, 2025 13:51 ET (17:51 GMT)
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