Raymond James reiterates Strong Buy on UPS stock, $127 target

On March 5, 2026, the financial services firm Raymond James reiterated its Strong Buy rating and $127 price target on United Parcel Service (UPS) stock, which was trading at $110.50. This endorsement is based on the analyst's view that the stock is undervalued, a perspective supported by an InvestingPro analysis that calculated a Fair Value of $127.80 for the shares. The reaffirmation comes as UPS management provides more granular details on its 2026 financial guidance amidst a significant corporate transformation. The company has reaffirmed its full-year 2026 targets of $89.7 billion in revenue with a 9.6% adjusted operating margin. However, the quarterly breakdown reveals a more challenging near-term outlook. For the first half of 2026, UPS expects revenue to be flat year-over-year with margins around 7.5%, which is below current consensus estimates. The company projects a stronger second half, with low-single-digit revenue growth and margins improving to approximately 11.5%. Specifically, first-quarter guidance suggests adjusted EBIT of $1.29 billion, or about $0.99 per share, which falls short of the $1.43 billion consensus estimate. This cautious near-term forecast is reflected in the fact that 16 other analysts have revised their earnings estimates downward for the upcoming period. Despite these headwinds, UPS is aggressively executing a multi-faceted restructuring plan, described as the largest network reconfiguration in its century-long history. Key initiatives include the closure of 24 facilities in the first half of 2026, with more under review, and a strategic shift of volume to more productive automated facilities. The company is also actively reshaping its customer base and workforce; it has already removed about 1 million pieces per day of lower-margin Amazon volume in 2025 and plans to remove another million in early 2026, representing roughly $5 billion in revenue over two years. Concurrently, programs like the Driver Choice Program, which offers lump-sum payouts to eligible drivers, aim to accelerate workforce optimization. For growth, UPS is focusing on higher-value segments such as enterprise B2B, healthcare, and small-to-medium-sized businesses, supported by its rapidly scaling Digital Access Program.