Friday will be recognized as “Bloody Friday” in the maritime industry, according to J Mintzmyer, head of research at Value Investor’s Edge.
Shipping titans including Zim Integrated Shipping Services (NYSE: ZIM), Genco Shipping (NYSE: GNK), and Eagle Bulk Shipping (NASDAQ: EGLE) had their stock values plummet on Friday.
According to experts, the decline could be attributed to deteriorating manufacturing activity in the United States as the country transitions to a post-pandemic economy.
Zim is downgraded by BofA.
On Friday, research analysts at BofA Securities lowered Zim to underperform. Due to increasing levels of uncertainty, BofA reduced its ocean multiple from 10x to 6x, which is lower than the multiple for Maersk. It also reduced Zim’s price target from $79 to $40, or 15% less than the $47.23 at the time of the study.
The rating was motivated by “concerns about lower US demand.” According to the researchers, prominent American retailers have reported that their spending on goods is decreasing and that they have excess inventory.
During the epidemic, increased demand for US imports caused port congestion and rising ocean spot costs.
Given the weakening of consumer demand, the analysts believe “this congestion could unravel swiftly, forcing a strong correction in ocean spot prices.” “Zim’s mostly chartered fleet and lower proportion of contracted volumes make it more vulnerable to dropping spot pricing than other carriers.”
