UPS Offering Buyouts: UBS Cuts Price Target to $135 on Slowing Demand

Vladimir Popescu
UPS meeting buyouts
Source: Watcher.Guru

UPS offering buyouts to full-time U.S. drivers represents the first voluntary severance program for unionized workers in the company’s 117-year history. At the time of writing, UBS has cut its UPS price target to $124 from $128 citing slowing demand and also international headwinds. The UPS driver buyout packages are part of the largest network reconfiguration ever, and delivery driver workforce changes include eliminating around 20,000 jobs right now.

UPS corporate announcement page
UPS corporate announcement page – Source: UPS

UPS Offering Buyouts Amid Slowing Demand And UBS Price Target Cut

UPS delivery driver working
Source: The Wall Street Journal

UPS offering buyouts comes as the Atlanta-based company executes massive operational changes to address slowing demand issues. The UBS price target reduction also reflects concerns about international business pressures affecting the shipping giant’s profitability right now.

UPS stated:

“For the first time ever, in recognition of these unique circumstances, we are looking to offer our full-time U.S. drivers the opportunity to participate in a voluntary program that would provide an opportunity to receive a generous financial package if they choose to leave UPS.”

Union Opposition to UPS Driver Buyout Packages

UPS facility with logo
UPS facility with logo – Source: Reuters

The Teamsters union strongly opposes the UPS driver buyout packages, and they’re arguing these violate the 2023 contract requiring UPS to create an additional 22,500 jobs.

Sean O’Brien, Teamsters general president, said:

“Our members cannot be bought off and we will not allow them to be sold out. UPS needs to live up to the existing contract.”

Delivery Driver Workforce Changes Target Savings

UPS trucks at distribution facility
UPS trucks at distribution facility – Source: Reuters

The delivery driver workforce changes aim to save over $1.2 billion annually through reduced operating hours and also facility closures. UPS offering buyouts alongside closing 73 facilities addresses the slowing demand challenges while the UBS price target cut reflects analyst concerns about international operations right now.

UPS analyst price target chart
UPS analyst price target chart – Source: UBS Group