United Parcel Service stock experiences a decline today

United Parcel Service stock experiences a decline today

United Parcel Service (NYSE:UPS) has exciting long-term goals, but the short term isn’t looking so bright. Investors are focusing on what lies ahead, sending UPS shares down nearly 8% as of 1:30 p.m. ET.

Speed ​​bumps in front of us

Investors entered UPS’s annual investor day with high hopes, and the company delivered some eye-catching forecasts. THE shipping giant raised its 2026 revenue target to between $108 billion and $114 billion and said it expected an adjusted operating margin of 13% by then.

For comparison, the company generated $91 billion in revenue in 2023. Wall Street’s consensus estimate for 2026 was $101 billion.

The environment is grim for shippers as large customers have reduced inventories due to questions about the economy and consumer health. UPS warned that the current quarter would be the “toughest” of 2024, saying profits would likely be down 40% year-over-year. The company responded by seeking to significantly reduce costs.

“After experiencing a challenging market in 2023, the small packaging sector is poised to return to growth in 2024 and beyond,” CEO Carol Tomé said in a statement. “Over the next three years, we plan to take bold steps to create a growth engine in premium markets, while driving higher productivity and efficiency.”

Is UPS a Buy After Its Investor Day Forecast?

UPS shares have fallen 22% over the past year and are down nearly 40% from their pandemic highs reached when shipping was the only thing keeping the retail economy alive. Some of the decline is cyclical, but the stock has underperformed its rival. FedEx by 22 percentage points so far in 2024 and by more than 50 percentage points over the past year.

FedEx shares have rebounded lately because management was able to reassure investors that its cost-cutting campaign was working. UPS, based on its comments over the coming months, remains a “proof” story for investors. There is great potential here, but management must demonstrate progress before actions hit the fast track.

Should you invest $1,000 in United Parcel Service right now?

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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool tops and recommends FedEx. The Motley Fool recommends United Parcel Service. The Motley Fool has a disclosure policy.

Why United Parcel Service Stock Is Crashing Today was originally published by The Motley Fool

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