The logistics business has been tough lately. One analyst doesn’t see it getting better soon, leading him to downgrade shares of both FedEx
FDX +1.47% and United Parcel Service UPS +0.38% .

Thursday, BofA Securities analyst Ken Hoexter cut his rating on both FedEx and UPS. His FedEx rating went to Hold from Buy. His UPS rating went to Sell from Hold. Hoexter’s price target for FedEx stock went to $240 a share from $245. His price target for UPS stock went to $83 from $91.

He sees “increased near-term pressure on volumes and costs” and expects “a muted 2025 air peak season.” Part of the problem is President Donald Trump’s executive order that ends the tariff-free treatment of “de minimus” parcels—small, low-value packages that companies such as Temu and Shein had been able to ship from China to the U.S. without paying taxes and duties on them. Putting import levies on those products will result in lower demand, Hoexter said in a research report. “The De minimis impact is De majoris.”

That creates another headwind for FedEx and UPS, who have been fighting through lower volumes since Covid-induced peaks. Still, although FedEx stock opened in the red, it rallied up 1.9% to $229.97 in early trading, while the S&P 500
SPX +0.82% and Dow Jones Industrial Average DJIA +1.30% were up 0.3% and 0.4%, respectively. UPS shares were up 0.3% at $84.12.

Starting points help explain the muted reaction to a Wall Street downgrade. Coming into Thursday trading, FedEx stock was down about 20% year to date. UPS shares were off 33%.

Declines have left both stocks trading for about 12 times estimated earnings over the coming 12 months, a discount to the S&P 500’s 23 times multiple. Five years ago, both UPS and FedEx shares traded for closer to 20 times estimated earnings.

Overall, 63% of analysts covering FedEx stock rate shares Buy, according to FactSet. About 47% of analysts covering UPS stock rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%.

The average analyst price target for FedEx stock is about $367 a share. The average analyst price target is about $143 a share.