ZIM - Zim Integrated stock: Citi analyst now recommends selling
2024-06-06 15:29:08 ET
ZIM Integrated Shipping Services Ltd (NYSE: ZIM) is down nearly 20% on Thursday after a Citi analyst issued a super bearish note on it.
ZIM Integrated stock could tank another 32%
Sathish Sivakumar downgraded the international cargo shipping company today to “sell” and said its shares could crash to $13 which suggests potential for another 32% downside from here.
The analyst is bearish on ZIM Integrated stock because its contract coverage for Trans-Pacific trade volume sits at 35% at writing versus the industry standard of about 65%.
Note that signed about 50% of Trans-Pacific trade volumes on contract last year. The NYSE listed firm relies significantly on the Trans-Pacific trade lane that makes up roughly 40% of its total volume.
Sivakumar’s view is different from our market analyst Crispus Nyaga who sees bullish momentum building in ZIM Integrated after a golden cross pattern formed in its shares last week.
Why else is the Citi analyst bearish on ?
Spot freight rates have gained over 70% since the end of first quarter. Still, Sathish Sivakumar recommends selling ZIM Integrated stock as he does not expect those rates to sustain into the back half of 2024.
The Citi analyst talked of downside risk to demand as well in his research note on Thursday. His dovish call arrives a couple weeks after said it swung to a profit in its first financial quarter ( read more ). A 14% year-on-year growth in the company’s revenue to $1.56 billion also topped Street estimates.
In May, the cargo shipping company raised its EBITDA guidance for the full year as well to between $1.15 billion and $1.55 billion. Eli Glickman – the chief executive of ZIM Integrated said at the time:
We are pleased with current positive momentum in our business. We are confident in ZIM’s strategic positioning as an agile container shipping player with a competitive cost- and fuel-efficient, modern fleet.
has resumed a quarterly cash dividend of 23 cents per share that will be paid on June 11th. Analysts at other investment firms including the Bank of America Securities and Barclays also currently rate shares of the $2.32 billion company based out of Haifa, Israel at “underweight”.
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