United Parcel Service Inc (NYSE:UPS) has been downgraded by Bank of America analysts after the package delivery firm’s second quarter earnings revealed several concerns.
UPS posted Q2 2025 adjusted earnings per share of $1.55, which was down 13% year-over-year, above Bank of America’s $1.52 target but below the Street’s $1.56 estimate.
Revenues were $21.2 billion, down 3% year-over-year, $206 million above Bank of America’s target.
Adjusted operating income was $1.88 billion, down 9% year-over-year, $25 million above the target, or $0.02 per share above.
Domestic and International adjusted operating margins were 7% and 15.2%, 30 basis points below and 100 basis points above Bank of America’s estimate, and down 10 and 370 basis points year-over-year, respectively.
Despite beating their forecasts for EPS and revenue, the analysts lowered their rating to ‘Neutral’ from ‘Buy’ and also downwardly revised their price objective to $98 from $115.
Shares of UPS traded down 3.8% at about $89 on Wednesday afternoon.
The analyst wrote that the downgrade reflects "a larger-than-expected small- to medium sized business (SMB) volume deceleration (on tariff pressures), slower-than anticipated cost takeout, accelerating Amazon business glide-down (to 30% year-over-year declines in H2 from 13% in H1), higher than expected Ground Saver costs (formerly SurePost), and delayed benefit from its voluntary driver separation program."
The analysts also lowered their earnings per share estimates for the upcoming quarters and years:
"We lower our Q3 2025, 2025, and 2026 EPS estimates 12%, 4%, and 9%, to $1.38, $6.70, $7.00, from $1.57, $7.00, and $7.70, respectively."
Bank of America pointed to ongoing uncertainty around UPS’s outlook.
"After pulling its 2025 revenue and profit outlook in April, UPS again withheld from providing targets,” they wrote. “CEO Carol Tome noted the range of scenarios is too wide, highlighting uncertainty on peak season demand, SMB mix pressure, tariff policy, and voluntary labor separation."
UBS held its $3.5 billion 2025 cost savings goal, but noted attrition rates tied to the Amazon volume glide down have been lower than anticipated. It is targeting Amazon volumes to decline 30% in the second half of 2025, from a decline of 13% in the first half.