1、 EQUITIES TRANSPORT&INFRA.UPS NEUTRAL FROMUNDERPERFORM PRICE*USD105.5 TARGET PRICE USD100(DOWNSIDE 5%)TARGET PRICE EPS 25e EPS 26e -5%-8%-3%Growing pains priced in 3 JULY 2025 Securities Research Report Production time:05:35*(London time)Research Analysts&Publishing EntitiesResearch Analysts&Publish

2、ing Entities With volume headwinds now seemingly priced in,we upgrade to Neutral In conjunction with todays sector report FREIGHT&LOGISTICS:The calm before the storm?,we reassess our investment thesis for UPS.The company continues to face a major volume headwind from its actions to reduce its exposu

3、re to Amazon,but with the stock down-16%YTD we currently see limited downside.This sees us upgrade our rating to Neutral from Underperform.The Amazon cat is out of the bag Since the team initiated coverage of UPS and FedEx in 2021,it has often felt as if we have been a lone voice in raising the alar

4、m about a rising threat from Amazon in the US Domestic parcel market.UPS is acutely exposed in this regard given Amazon has historically been its largest customer(c.18%of FY2024 US Domestic revenue).But after the companys FY results on 30-Jan,when it announced a plan to reduce its Amazon volume expo

5、sure by“more than 50%”by H1 2026,it is now clear to all that UPS faces a major volume headwind it must now try to overcome.While yields may benefit from the self-styled Amazon glide down,as a network business one can only shrink to victory for so long.and our negative outlook is now better-matched b

6、y the Street UPS has provided regular disappointment in the years post-Covid,with four guidance downgrades over the past two years.While consensus estimates have continually trended downwards,recent downgrades have been more material.The result is that our negative outlook for growth is now better m