BNP Paribas downgraded the two giants in the delivery business, taking a dim view of the growth potential for FedEx (FDX) and UPS (UPS), undermined by the emergence of Amazon (AMZN) as a significant competitor, and “volume rationalization” that will limit earnings growth for UPS (UPS).
While the firm prefers FedEx (FDX) over UPS (UPS), FedEx (FDX) is not immune to the broader competitive pressures in U.S. domestic shipping. BNP Paribas anticipates a solid FY26 for FDX, but amid the rise of Amazon (AMZN) with its next-day offering and zip code coverage continually improving, the competitive pressure on FDX is expected to continue.
For UPS, lost market share, namely its Amazon (AMZN) volume, makes BNP Paribas uncertain as to the company’s ability to “grow earnings despite a potential yield benefit from any mix change.” The firm’s FY26 EBIT estimate now sits 9% below consensus. And with a new price target of $85 that suggests 20% downside, the firm downgrades UPS (UPS) to Underperform from Neutral.
Shares of both UPS (UPS) and FedEx (FDX) are both underwater on Tuesday.
