United Parcel Service's (UPS) Q2 results were a "modest miss," but an extreme lack of visibility into the second half of the year is more concerning amid risks like macroeconomic uncertainty, Amazon (AMZN) volume declines, United States Postal Service insourcing, and unclear tariff policy impacts, Morgan Stanley said in a note emailed Wednesday.

While total revenue fell 2.7% year-over-year, the US domestic segment missed both Morgan Stanley and consensus expectations due to higher costs from the Ground Saver program and slower-than-expected employee attrition, which undermined early cost-cutting gains, according to the note.

Labor attrition has not kept pace with Amazon delivery declines, making it harder to remove costs in tandem with volume cuts. Despite driver buyout offers, efficiency gains are being offset by Ground Saver delivery expenses, the firm added.

UPS did not provide full-year revenue or operating profit guidance, citing macroeconomic volatility, while the peak season outlook remains murky as small and medium businesses have not yet submitted plans.

Morgan Stanley lowered its price target on the company's stock to $75 from $80 and maintained an underweight rating.

Shares of United Parcel Service were down 2.3% in recent trading.

Price: 88.78, Change: -2.06, Percent Change: -2.27