UPS stock: BofA maintains Q3 estimates below Street

Investing.com -- Bank of America reiterated its Underperform rating on United Parcel Service, maintaining third-quarter earnings estimates below consensus while adjusting long-term forecasts for merger and acquisition impacts.

“We maintain our 3Q25e EPS of $1.30, below Street’s $1.34,” BofA said. The firm slightly reduced its estimate for domestic average daily volume, now targeting a 10% year-over-year decline, or 16.6 million daily packages, versus its prior forecast of a 9% drop.

BofA cited “Amazon glide-down, de minimis volume impacts, and soft volume backdrop” as drivers of the weakness.

BofA offset some of that pressure with improved pricing expectations. “We target rev/package up 7% year-year, from our prior +6%,” the analysts wrote, while projecting domestic margins of 5.1%, representing a 190-basis-point deterioration from the second quarter.

International results are also expected to soften. BofA forecasts flat year-over-year revenue and an operating margin of 15%, down 300 basis points from a year ago.

The decline was attributed to “trade lane shifts from de minimis volume impacts,” with UPS rerouting more than 100 ad hoc air shipments during the quarter.

On strategy, UPS terminated its planned acquisition of Mexican logistics partner Estafeta after failing to meet closing conditions.

At the same time, it expects to complete its $1.6 billion purchase of Andlauer Healthcare Group in the fourth quarter. With that timing shift, BofA raised its 2026 and 2027 earnings-per-share estimates by 1% each.

Despite the adjustments, the firm lowered its price objective to $81 from $83, citing “sustained cost pressures” and volume declines tied to Amazon and de minimis rules.

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