2023-09-19 02:00:00 ET
ZIM Integrated ( NYSE: ZIM ) stock price has been in a strong bearish trend in the past few months. The shares crashed to a low of $10.98 last week, the lowest level since April 2021. In all, the stock has dropped by more than 73% from its highest level in 2022.
Make hay when the sun shines?
ZIM Integrated and other shipping companies are going through major challenges. Recent data from countries like China and the United States shows that exports and imports have moderated in the past few months.
The most recent data showed that China’s exports have dropped sharply this year and the strong dollar could make it worse. Exports have dropped in the past four straight months, as I wrote here .
At the same time, the cost of shipping has continued falling. After making some modest recovery in August, the Freightos Baltic Index has dropped below $1,400 and is now at the lowest point in more than a month.
ZIM Integrated is also struggling as the cost of operations jump. For shipping companies like Maersk, MSC, and ZIM, fuel is one of the biggest costs in the industry. Brent crude oil has jumped to $95 while West Texas Intermediate (WTI) has risen to $91.
Therefore, there is a likelihood that ZIM Integrated’s costs are rising. This is happening at a time when the company’s demand is waning. The most recent results showed that the company’s revenue came in at $13 billion in Q2 from $3.4 billion in the same quarter in 2022.
ZIM Integrated has also moved to a loss zone, as I wrote here . Its loss came in at $212 million in Q2 from a profit of $1.3 billion in Q2’22. As a result, the company has suspended its dividend.
ZIM Integrated stock price forecast
Analyst at JP Morgan believes that the ZIM stock will bounce back in the coming months. They expect that these issues are temporary and that the shares will continue rising. In a statement, the analysts wrote that:
“Over the past two years ZIM has moved from a leader in profitability to having possibly the lowest margins in the sector. We view this as temporary.”
The daily chart shows that the ZIM Integrated stock price has been in a strong bearish trend in the past few months. It recently dropped below the important support level at $11.75, the lowest level on June 27th and December 29th last year.
ZIM shares have also dropped below the 50-day and 100-day exponential moving averages (EMA). It has also formed a head and shoulders pattern. Therefore, there is a likelihood that the shares will continue falling as sellers target the key support at $10.
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