The logistics sector is currently experiencing disfavor among investors, with United Parcel Service (UPS -5.07%) stock significantly affected on Tuesday. The combined impact of a peer company’s disappointing quarterly earnings report, concerns over the adverse effects of aggressive tariffs, and a revised price target contributed to a decline in UPS shares, which ended the day over 5% lower. In contrast, the S&P 500 index remained relatively stable throughout the day.
A primary factor in this decline was a reduction in the price target set by Ken Hoexter, an analyst from Bank of America’s Securities unit. Hoexter adjusted the UPS price target downward from $133 to $129 per share, yet continued to uphold a buy recommendation despite the general pessimism surrounding the logistics sector.
The reasons behind Hoexter’s decision were unclear, but the adjustment occurred during a challenging period for UPS and similar businesses like FedEx. Both companies are regarded as cyclical businesses due to their involvement in various economic sectors, and there is investor concern that proposed tariffs from the Trump administration could negatively impact their volumes.
Additionally, FedEx has not performed exceptionally well recently. The company released its fiscal third-quarter 2025 results last Thursday, surpassing revenue expectations but falling short on earnings. Furthermore, FedEx revised its annual revenue and profit guidance downwards.
Given FedEx’s struggles, there is a reasonable expectation that UPS may be facing similar challenges, leading to investor caution regarding stocks in the logistics sector.