ZIM Stock In Spotlight After Price Target Hikes By Barclays, Jefferies: But Retail’s Not Sold

Jefferies reportedly raised its price target on ZIM to $28 from $25, while keeping a ‘Hold’ rating on the stock.

First Published Nov 25, 2024, 6:33 PM IST | Last Updated Nov 25, 2024, 6:33 PM IST

Following its strong third-quarter earnings report, Israeli cargo shipping company ZIM Integrated Shipping Services ($ZIM) has received a slew of price target upgrades by brokerages.

Jefferies reportedly raised its price target on ZIM to $28 from $25, while keeping a ‘Hold’ rating on the stock. The brokerage noted that Q3 earnings "jumped off the charts," led by a strong freight market, but also due to management's deliberate action to avoid contracting at low rates and staying highly exposed to spot rates.

At the same time, Barclays analyst Marco Limite reportedly raised the price target on the stock to $16.50 from $13.90, while keeping an ‘Underweight’ rating on the shares.

The brokerage has raised its fiscal 2024 earnings before interest, tax, depreciation, and amortization (EBITDA) forecasts by 10% following the company’s earnings announcement. However, it believes earnings will peak in 2024 and expects a correction in fiscal 2025 against the backdrop of oversupply and potential destocking.

Last week, ZIM reported a 117% year-over-year (YoY) rise in its third-quarter revenue to $2.765 billion, way above Wall Street’s estimate of $2.39 billion.

The company reported a net income of $1.13 billion compared to a net loss of $2.27 billion in the third quarter last year. Earnings per share came in at $9.34, significantly outperforming an analyst estimate of $6.95.

It also raised its guidance for the full-year 2024, expecting to generate adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) between $3.3 billion and $3.6 billion compared to an earlier guidance range of $2.6 billion and $3.0 billion.

Notably, the board declared a regular cash dividend of approximately $340 million, or $2.81 per ordinary share and a special dividend of approximately $100 million, or $0.84 per share.

Despite the bullish take by analysts, retail sentiment on Stocktwits flipped into the ‘bearish’ territory (39/100) from ‘bullish’ a day ago. The stock was trading nearly 4% lower in Monday’s pre-market session.