From Morningstar:

Maersk, a Danish shipping company, had a disappointing 2023 but has seen a 15.1% share price increase in the first week of 2024 due to the re-routing of vessels after attacks in the Red Sea which have caused freight rates to drastically increase. Morningstar’s fair value of Maersk’s stock is 17.600 Danish kroner with a High Uncertainty Rating and no Moat Rating due to competitive pressures.

The attacks in the Red Sea by Iran-backed Houthi rebels has led to commercial ships avoiding the area and rerouting from the Suez Canal, causing longer and more expensive journeys. Maersk, the second-largest container shipping company, has experienced setbacks such as attacks on their vessels. The detour around Africa has increased shipping prices nearly double.

Although the disruptions in the Suez Canal have caused chaos for global supply chains, the shipping industry has seen a surge in stock prices due to the over-capacity of ships and hope for better margins. Maersk’s earnings have been fluctuating, with 2021 and 2022 being profitable but 2023 seeing a steep loss, leading to job cuts.

It’s predicted that the disruptions and higher freight prices will continue for around 3-4 months before the situation settles and the capacity of the market is rebalanced. This will directly impact the profitability of shipping companies.

Morningstar’s key metrics for Maersk include a fair value estimate of 17,600 Danish Kroner, a 4-star rating, no Economic Moat Rating, and a High Uncertainty Rating.



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