UBS downgrades A.P. Moller-Maersk due to lack of catalysts, concerns over overcapacity

From Investing.com: 2024-10-17 05:27:33

UBS downgraded AP Moeller – Maersk A/S B shares to Neutral, citing lack of near-term stock re-rating conviction. Price target reduced to DKr 11,000 from DKr 13,953. Shares fell 1.8% in European trading. Concerns raised over potential overcapacity in Ocean sector and investor apprehension about increased capital allocation to Logistics transformation.

UBS predicts extended FCF burn for shipping industry starting in second half of 2025. Supply/demand model suggests potential overcapacity issues by late 2024 or early 2025. Trump presidency could temporarily boost Transpacific rates, delaying potential FCF burn till late 2025 or early 2026. However, tariffs may hinder industry profitability in the long run.

UBS outlines two scenarios for Maersk’s stock valuation: DKr 14,000 upside per share if ocean demand surpasses expectations and lower downside risk at DKr 8,000 if rates fall below 2019 levels. Upbeat scenario includes sustained higher freight rates and share buybacks, while downside reflects possible rate declines and logistic sector challenges.



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