United Parcel Service (UPS) will likely set “better and bolder” three-year objectives, BofA Securities said in a note Tuesday, ahead of the company’s investor day. The company is hosting an investor day on Tuesday and is expected surpassing revenue and margin targets, but more details are awaited at the conference. UPS Chief Executive Carol Tome sees growth in small package market from 2024 and onwards, and a focus on premium markets and productivity. Among the targets is a revenue of $108 billion to $114 billion in 2026, a 6% to 8% compound annual growth rate, compared with BofA’s estimate of $105 billion in revenue. The company projects operating margin of 13% or higher, led by Domestic operations targeting 12% versus BofA’s estimate of 10%. “Quick math on mid-point revenues and margin targets could indicate an approximate $13.40 of EPS on UPS’ targets vs. our $11.10 2026 EPS estimate, a 20%

United Parcel Service said that there is excess parcel capacity of 12 million pieces a day in the U.S., of which 6 million are held by the Postal Service and the remaining by carriers including UPS. UPS estimates that overall, carriers delivered 84 million parcels a day at the end of 2023, lower than previously projected because consumers pulled back spending as inflation skyrocketed. However, UPS CEO Carol Tomé said this is not indicative of a price war. She added that UPS is no longer reducing its intake of Amazon parcels, as part of previous efforts to reduce its exposure to a single customer. Amazon makes up more than 11% of UPS’ revenue. “The glide-down is over,” she said.

United Parcel Service plans to devote a larger chunk of its revenue to capital spending through 2026 as margin pressures from the costs of its labor contract begin to subside, CFO Brian Newman tells WSJ. The delivery giant expects capital spending between 2024 and 2026 to comprise about 5.5% of total revenue, up from 4.9% the prior comparable period. UPS and union leaders last summer agreed to a new five-year pact, the costs of which were particularly substantial in the first year. The company is continuing to cut costs and boost efficiencies, for example by shedding 12,000 jobs and expanding use of RFID technology, Newman says.

CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows: Our 12-month target of $148, cut $6, reflects a 15x multiple of our revised 2025 EPS estimate, in line with UPS’s historical forward average. We cut our 2024 EPS estimate by $0.96 to $8.36 and 2025’s by $0.71 to $9.89. UPS held an Investor Day event today, outlining strategic and financial targets through 2026. UPS has guided for 2026 revenues in the range of $108B-$114B, an implied CAGR of 6.8%, but also reiterated its 2024 revenue guidance of $92.0B-$94.5B. At the midpoint of these ranges, we note that the cadence of revenue growth guidance suggests just 2.3% in 2024, but then accelerating ~4x to the 9% range in 2025 and 2026, which we think is highly aggressive barring a major uptick in market volumes. On the margin