UPS stock: analyst says it will lose half of Amazon business by mid 2026
United Parcel Service Inc. (NYSE: UPS) is preparing for a major change in its business as it expects to lose half of its Amazon-related volume over the next six quarters, according to Bank of America analyst Ken Hoexter.
The anticipated decline highlights the growing pressure on UPS CEO Carol Tomé to steer the company toward higher-margin segments, amid a broader backdrop of revenue challenges and evolving global trade conditions.
UPS stock tanked nearly 8.0% on Tuesday after reporting disappointing numbers for its fiscal Q2.
Why is UPS losing Amazon business?
UPS is losing Amazon business as the e-commerce behemoth continues to internalise its logistics operations.
Amazon has been committed to expanding its own delivery network, reducing reliance on 3rd party carriers like United Parcel Service; a transition that forces UPS to reevaluate its customer mix and operational priorities.
UPS chief executive Carol Tomé is responding by doubling down on higher-margin segments and cutting costs aggressively, including facility closures and workforce reductions, to offset volume declines and preserve profitability.
However, her efforts have so far not resulted in sufficient confidence in updating the full-year outlook.
On Tuesday, the shipping giant cited macroeconomic uncertainty as it again refrained from offering more colour on what it expects for the remainder of 2025.
Including today’s post-earnings decline, UPS shares are down over 30% versus their year-to-date high.
What tariffs mean for UPS stock in 2025
UPS’s international business is facing headwinds from “de minimis” tariffs on low-value Chinese shipments.
These levies, introduced by the White House in May, have disrupted the flow of bargain e-commerce goods from platforms like Temu and Shein – key contributors to the multinational’s Sino-US trade volume.
In an interview with CNBC, Ken Hoexter said UPS’s international margins have dropped to 14%, their lowest in over a decade, due to the removal of the de minimis exemption, which is significantly hurting discretionary online purchases.
This margin compression, he added, is weighing significantly on investor sentiment, contributing to a continued downtrend in UPS stock price in 2025.
BofA still says buy UPS stock on post-earnings dip
Despite near-term challenges, the Bank of America analyst maintained his bullish stance on UPS stock, viewing the post-earnings dip as a buying opportunity for long-term investors.
Ken Hoexter believes the company’s aggressive cost-cutting measures and strategic pivot toward higher-margin business will pay off in the long run.
BofA has a $115 price target on United Parcel Service that indicates potential upside of more than 20% from here.
Additionally, an exceptionally lucrative dividend yield of more than 7.0% makes UPS shares all the more attractive to own for the back half of 2025.
Investors should note that BofA is not the only Wall Street firm that’s keeping positive on United Parcel Services.
The consensus rating on the shipping and logistics company also currently sits at “overweight”.
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