2023-04-21 12:10:27 ET
ZIM Integrated Shipping ( NYSE: ZIM ) -3.9% in Friday's trading as J.P. Morgan downgraded to Neutral from Overweight with a $20.80 price target, slashed from $27, expecting the stock to lag its peers from a profitability perspective over the next 2-3 years due to high costs related to ship charters.
JPM analyst Samuel Bland said the recent improvement in TransPacific rates is welcome but he questions the longevity, as the sharp increase "may driven by ongoing contract negotiations on the TP, with higher spot rates encouraging customers to agree to relatively higher contracted rates."
"This makes us question the longevity of the spot rate increase, absent any more meaningful improvement in demand," Bland wrote, noting recent commentary from Hapag-Lloyd suggested volumes would remain weak in April and May.
Bland also believes ZIM's ( ZIM ) guidance may have a more aggressive spot rate assumption built into it than elsewhere.
ZIM Integrated Shipping ( ZIM ) could be a great pick, "based on the Peter Lynch cyclical stock picking criteria and applying the step-by-step approach," Patrik Mackovych writes in an analysis published recently on Seeking Alpha .
For further details see:
ZIM Integrated Shipping cut at J.P. Morgan on uncertain spot rate outlook