1 Reason I'm Still Keeping an Eye on UPS Stock, Despite Recent Lows

Key Points

• UPS is cutting costs and undergoing an overall recalibration to its business.

• The logistics giant is targeting higher-margin customers and cutting ties with others.

• The company's healthcare logistics segment is a bright spot worth watching.

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United Parcel Service (NYSE: UPS), or UPS, isn't the market darling it once was during the pandemic. To put it in numbers, the stock has seen a 32% drop in price year to date and an abysmal fall of about 60% since its pandemic-era highs.

What's happening to the transportation stock is largely a reflection of its earnings, which have declined as labor costs have increased, margins have narrowed on weaker U.S. volumes, and tariff headwinds affect how the company does business.

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Even so, performance at UPS could be gearing up for a turnaround. And it has everything to do with the high-margin clients that UPS is seeking.

Image source: Getty Images.

The one reason I'm keeping an eye on UPS -- healthcare logistics

Earlier this year, many UPS investors were shocked to hear that the brown box giant was walking away from its partnership with Amazon (NASDAQ: AMZN), historically one of its most high-volume accounts. The move away from Amazon, however, was strategic. Even if Amazon accounted for about 11.8% of UPS' revenue last year, Amazon packages have lower margins than those from other clients.

Besides -- over the last decade, UPS has been building up a healthcare logistics business that does more than just deliver sneakers. With its acquisition of Andlauer Healthcare in April 2025, along with a previous acquisition of Bomi in 2022, UPS now has the means to provide temperature-controlled solutions to customers around the world. Total healthcare revenue was $10.5 billion in 2024, with plans to take it to $20 billion by 2026.

The good thing about healthcare is that clients in this sector care more about reliability than penny-pinching. They're more likely to trust a logistics giant to deliver what could be extremely sensitive products than a competitor with less experience. For UPS, this could mean higher-margin deliveries on routes that have already been built into its global network.

Could healthcare really turn UPS around? With some help from other high-margin clients -- such as its business-to-business segment -- I think so. Given today's depressed price, momentum from healthcare could inspire investor confidence and shift the downward trajectory back up.

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Steven Porrello has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and United Parcel Service. The Motley Fool has a disclosure policy.