- J.P.Morgan cuts Maersk to “neutral” from “overweight”.
- Rising spot rates due to attacks at the Red Sea offer only short-term gains.
- Shipping companies are diverting shipments around the southern tip of Africa to avoid the Red Sea.
J.P.Morgan cuts Maersk to “neutral” from “overweight”, saying rising spot rates due to attacks at the Red Sea offer only short-term gains for the Danish shipping group, reports XM.
Subdued economic outlook
Shipping companies are diverting shipments around the southern tip of Africa to avoid the Red Sea, driving up the cost for vessels for the longer voyage. “We view this disruption as a one-off boost, and do not expect it to have a permanent benefit to earnings,” JPM says.
The broker expects Maersk to return to weak industry fundamentals once the disruptions subside, saying growing spot rates cannot solve the oversupply problem. Though it raises its estimates for Maersk’s 2024 results, JPM keeps 2025 forecasts largely unchanged.
Before the Red Sea attacks, Maerks had faced falling demand due to what it called a “subdued economic outlook”. In November, it decided to cut around 10,000 jobs, warning of weak prices and growing costs.
JPM returns to the “neutral” rating only two months after it raised Maersk to “overweight” following the job cuts decision.
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Source: XM
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