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Investing.com -- HSBC has downgraded United Parcel Service (NYSE:UPS) to Hold from Buy and slashed its price target to $105 from $140 per share. 

In a note to clients on Thursday, the bank warned that “tariff uncertainties will remain an overhang on UPS’ short-term demand outlook and share price.”

While UPS’ first-quarter results were largely in line, HSBC analysts said the positive effects of internal cost controls and the Amazon (NASDAQ:AMZN) volume glide-down were being offset by intensifying trade pressures. 

“We underestimated the Amazon glide down and tariff headwinds,” the firm said in its note.

Adjusted operating profit for the first quarter was $1.8 billion, up 1% year over year and slightly above consensus, but 7% below HSBC’s forecast. Margins improved in U.S. domestic operations but deteriorated in international segments.

UPS expects a 16% year-over-year decline in Amazon volumes in the second quarter and a 30% drop in the second half. 

The company is targeting $3.5 billion in cost savings tied to the Amazon contract reduction, facility closures, and workforce cuts of about 20,000 positions. 

Still, HSBC warned that “tariff headwinds [are] likely to overwhelm” these efforts.

The China-to-U.S. lane, which accounts for 11% of international revenue, faces potential volume declines of up to 25%, according to the bank. 

HSBC added that "U.S. import volumes were less than 2% of global ADV, but we calculate this could be over 20% of its international exports."

For the second quarter, UPS guided revenue to $21 billion, implying a 6% year-over-year decline, and an adjusted operating margin of 9.2%, down from 9.5% a year earlier.

HSBC cut its 2025–27 adjusted operating profit estimates for the company by 15% to 16% and said “U.S. tariffs [are a] greater catalyst vs self-help for now.”

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