Friday will “Hereby [be] known in #shipping as ‘Bloody Friday,’ ” J Mintzmyer, head of research at Value Investor’s Edge, tweeted.
Stock prices for shipping giants such as Zim Integrated Shipping Services (NYSE: ZIM), Genco Shipping (NYSE: GNK) and Eagle Bulk Shipping (NASDAQ: EGLE) experienced major drops Friday.
Experts said the decreases could be due to weakening manufacturing activity in the U.S. and a weakening demand for consumer goods as the country shifts to a post-pandemic economy.
Read: US import demand is dropping off a cliff
BofA downgrades Zim
Research analysts at BofA Securities on Friday downgraded Zim to underperform. BofA lowered its ocean multiple from 10x to 6x, below the multiple for Maersk due to higher levels of uncertainty. It also lowered Zim’s price objective from $79 to $40, 15% below the $47.23 at the time of the report.
The downgrade was based on “concerns over weaker U.S. demand.” The analysts said large American retailers have indicated spending on goods is falling and they have excess inventories.
Heightened demand for U.S. imports during the pandemic led to port congestion and skyrocketing ocean spot rates.
Given the slowing of consumer demand, “this congestion could unwind rapidly, in our view, driving a sharp correction in ocean spot rates,” the analysts said. “Zim’s largely chartered fleet and lower proportion of contracted volumes make it more exposed than other carriers to declining spot rates.”
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