Where Will UPS Stock Be in 1 Year?

• UPS is reducing Amazon deliveries, which volition little measurement but perchance boost profits.

• SMB marketplace maturation remains uncertain owed to caller tariffs and shifting proviso chains.

• Dividend sustainability is successful question, with a imaginable request for currency reserves oregon debt.

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The outlook for United Parcel Service (NYSE: UPS) is not straightforward. The institution is acceptable to spot immoderate large changes implicit the adjacent year, but the existent question for investors is however overmuch it volition change, what volition hap to the stock price, and what the dividend, present yielding 6.5%, volition look like. Here are the main factors to support an oculus on.

I volition absorption connected the U.S. home bundle segment, arsenic it accounts for implicit fractional of UPS's net and is typically the plaything origin successful those earnings. It's besides the conception undergoing important alteration successful 2026. The 2 large factors to absorption connected successful 2026:

• The deliberate simplification successful Amazon transportation volumes volition lend to a alteration successful transportation volumes wide but should summation gross per piece, hopefully starring to borderline enlargement and a nett increase

• The small- and medium-size concern (SMB) marketplace is simply a cardinal extremity marketplace for UPS, and it's unclear whether SMBs person yet felt the afloat value of tariffs connected their operations.

Volume, revenue, profits, and lawsuit prospects are indispensable astatine each times, but peculiarly truthful erstwhile the institution appears to beryllium facing a important situation successful supporting its $5 dividend payment. As a reminder, the Wall Street expert statement calls for conscionable $5.3 cardinal and $5.4 cardinal successful escaped currency travel (FCF) for UPS successful 2026 and 2027, respectively. These figures bespeak UPS would request to dip into currency reserves oregon contented indebtedness to enactment the dividend.

While UPS could muddle done and prolong the dividend, determination are important questions astir whether this is really the champion usage of shareholder resources, and it doesn't permission the institution overmuch country for error.

Management plans to trim Amazon deliveries (focusing connected low- oregon negative-margin deliveries) by 50% from the commencement of 2025 to the 2nd fractional of 2026. The determination makes cleanable consciousness and aligns with management's strategy of tailoring its web for much productive deliveries alternatively than chasing measurement maturation successful its ain right.

As UPS shifts to much productive deliveries, transportation volumes are dropping, portion gross per bundle is rising. In 2025, volumes are falling, but higher gross per bundle helps offset the little full volume.