United Parcel Service (UPS 0.14%) held an analyst day earlier this week where the company provided investors with an optimistic new three-year strategic plan for revenue and profit margin growth. But not all analysts share that optimism.
Following the event, Morgan Stanley analyst Ravi Shanker raised his firm's price target for UPS stock by $5 per share, but he still thinks investors should sell the stock. The new price target of $100 per share would still represent a decline of 33% from the stock's current price. That's after share prices for the delivery and logistics company have already dropped by more than 20% over the past year.
Is it time to sell UPS stock?
While Shanker wasn't disappointed with the 2026 financial targets presented by UPS CEO Carol Tomé, the analyst questioned the viability of the path to get there. UPS hopes to achieve annual revenue of between about $108 billion and $114 billion by 2026. That compares to 2023 revenue of $91 billion.
UPS said it plans to grow revenue with a multi-pronged approach to grow volume with higher productivity, efficiency, and by winning back lost market share. Revenue in 2023 was more than 9% lower than the prior year. Tomé addressed that decline, stating "We had more volume leave us than we anticipated," as competitors absorbed some of UPS' small package business.
However, regaining that business might prove difficult or lead to lower pricing that would impact profitability and make profit margin targets hard to achieve. UPS will also be relying on technology upgrades to "unlock revenue growth and drive cost optimization efforts."
UPS could surprise the Morgan Stanley analyst with a flawless execution of its strategy. However, competition or the macroeconomic environment could also prevent it from achieving its goals. Investors who don't want to take that risk might want to invest elsewhere at this stage of its turnaround.
