On Jan 31, Baird analysts took action to downgrade United Parcel Service ( UPS , Financial ) to Neutral because Amazon ( AMZN , Financial ) plans to decrease shipping volume by 50% by the year's second half of 2026. The shipping giant faces a major challenge because Amazon is stepping up its internal logistics operations to the point where it now represents 12% of UPS's projected 2024 income stream.

The financial analyst downgrade of UPS results from predicted revenue drops which will exceed 6% below market consensus during 2025 because of its struggles in a post-Amazon delivery market. UPS will combat recent revenue declines by shifting its operations toward healthcare logistics and international markets although analysts predict that these market transitions will require substantial time before becoming profitable.

The analysts at Baird said UPS chose a shrewd long-term business model by pursuing profits instead of employee volume growth yet the company needs to intensity its operations to overcome Amazon's influence.

Shareholders continue with reserve until UPS executes its restructuring process and reduces costs to maintain earnings. The analysts at Baird envision stock prices will hold within boundaries throughout the upcoming months because investors remain unclear about UPS's ability to obtain substitute sales from Amazon's defected volume. The stock experienced a 0.88% decrease after the rating decrease.

This article first appeared on GuruFocus .