A Crack in the Pro-Cyclical Bull Case?

Research evidence excerpt

A Crack in the Pro-Cyclical Bull Case?

Idea

July 28, 2026 04:10 PM GMT

Morgan Stanley & Co. LLCMUnited Parcel Service | North America Ravi Shanker

Equity Analyst

A Crack in the Pro-Cyclical Bull Ravi.Shanker@morganstanley.comNancy Hipp +1 212 761-6350

Research Associate

Nancy.Hipp@morganstanley.com +1 212 761-1311

Case? Madison J Pasterchick

Madison.Pasterchick@morganstanley.com +1 212 761-3787

AlphaSignals Earnings Reaction

United Parcel Service (UPS.N, UPS UN)

Unchanged Modest upside Largely unchanged

Freight Transportation | United States of America

Impact to our thesis Financial results versus consensus Direction of next 12-month

consensus EPS Stock Rating Underweight

Source: Company data, Morgan Stanley Research Industry View In-Line

Price target $76.00

Shr price, close (Jul 27, 2026) $112.95

UPS stock has been a beneficiary of the improving cycle Mkt cap, curr (mm) $95,951

sentiment YTD but a modest beat vs. a lower bar in 2Q, 52-Week Range $122.40-82.00

followed by a <0.5% FY raise and cautious 3Q commentary

likely demonstrate that the cycle could flow through differently

for Parcels vs. others. Structural concerns also remain.

Key Takeaways

2Q beat, but off of lower expectations as Domestic and SCS drove a modest

earnings beat, while International was slightly soft.

Higher revenue/EPS guidance was offset by weaker 3Q outlook, keeping earnings

4Q weighted.

Cycle benefit is limited as UPS needs stronger consumer eCommerce demand,

not just inventory restocking, to drive upside.

Structural risks remain as AMZN, regional competition, labor costs, and volume

uncertainty continue to pressure the outlook.

Normalized EPS appears around ~$7 and risk overhangs point to a lower multiple

than historical averages.

Remain UW.