Equity analysts are advising a “sell” on AP Moller-Maersk shares after the Danish liner giant took a beating on Thursday.
The stock fell 15% in Copenhagen on the back of a report that disappointed the market.
And DNB sees no relief in sight for the company.
“Maersk’s 2024 outlook solidified our view that headline spot rate movements should be insufficient to save liners from a challenging market that should soon see a race to the bottom once more,” analyst Jorgen Lian said in a note.
“In the ensuing dogfight, someone will have to lose out in order to rebalance a vastly oversupplied market. With such an outlook, current cash buffers are of limited value to investors,” he said.
DNB reiterated “sell” and cut the share price target to DKK 9,500 ($1,370) from DKK 10,400.
Maersk B shares traded around DKK 10,900 on Friday.
“We see considerable cash burn over a long period necessary to prompt sufficient scrapping of modern tonnage in order to find a market equilibrium. Hence, current cash buffers among the companies are merely a delay to the inevitable, and should be of limited value to investors in our view,” Lian said.
Fearnley Securities said there is “not much to be optimistic about”.
Analyst Oystein Vaagen sees limited upside to pricing as there will be no share buybacks and rates are likely to decline.
Yesterday’s guidance from Maersk was below expectations.
“While Maersk tends to be conservative, we don’t believe that is the case this time and street expectations are too high,” Vaagen said.
Fearnley maintained “sell” with a target price of DKK 8,500.
Handelsbanken sees freight rates coming down sooner or later.
“The market will move from undersupply to balance in Q2 and oversupply in H2. It is thus only a matter of time before freight rates come down (immediately if the Red Sea disruption is resolved or gradually driven by new capacity),” analyst Timo Heinonen said.
The Swedish bank has a short-term “sell” recommendation and a long-term underperform recommendation with a price target of DKK 12,000.
“Our main argument for our negative investment case has been high capacity growth, and the Q4 report brought nothing new. The Red Sea disruption is just a temporary support for freight rates,” Heinonen said.
Jefferies kept its above-guidance Ebitda forecast of $8.3bn for 2024. Maersk guided Ebitda of $1.6bn.
The broker said that “the main question is the duration of the Red Sea diversions and the elevated freight rates”.
“But what seems obvious is that Maersk’s expectations for 2024 show little benefit from its transpacific contracting period and has closed the door on meaningful exposure to Asia-Europe strength.
Meanwhile, management noted on the call that it has been chartering in ships to boost capacity on the Asia-Europe routes, a dynamic they would only undertake if profitable,” Jefferies analysts said in a note.