Shares of Zim Integrated Shipping Services (ZIM 3.63%) have more than doubled so far in 2024, fueled by geopolitical tensions that have caused ocean shipping rates to rebound.
At least one analyst believes the rally is running out of steam. Shares of Zim traded down 15% as of 10:30 a.m. ET after Citigroup downgraded the stock to a sell.
Is this as good as it gets?
Zim is one of the world's 20 largest ocean shipping companies. The stock was caught in the doldrums last year due to weak demand and investor concerns about its debt. But the company's outlook improved in early 2024 as tensions in the Middle East disrupted key shipping lanes and caused shipping rates to climb.
The rally has continued through 2024, with Zim shares up more than 100% coming into Thursday's trading day.
Citi analyst Sathish Sivakumar is calling a top. The analyst downgraded Zim shares to sell from neutral with a price target of $13, suggesting more than 30% downside from current prices. Sivakumar wrote that the recent move in spot freight rates up more than 70% is unlikely to sustain into the second half of the year.
Is now the time to sell Zim shares?
Shipping is a difficult industry to invest in because of how often supply and demand are not aligned. Demand tends to move quickly, while changes in supply take time as new ships are built or old ones are taken out of service.
Last year, Zim shares sank because supply outweighed demand. This year, the reverse is true. Sivakumar's call is based in part on Citi's belief that the U.S. consumer is slowing, which would reduce demand and help ease pressure on rates.
There are a lot of wild cards here including what becomes of tensions in the Middle East and how resilient the U.S. economy will prove to be. But it is hard to deny the cyclicality of the underlying business. Given Zim's rapid rise so far in 2024, and the inevitability of a downturn at some point, investors would be wise to consider taking Sivakumar's advice and cashing out on appreciated Zim shares.
Citigroup is an advertising partner of The Ascent, a Motley Fool company. Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool recommends Zim Integrated Shipping Services. The Motley Fool has a disclosure policy.
FAQs
Shipping is a difficult industry to invest in because of how often supply and demand are not aligned. Demand tends to move quickly, while changes in supply take time as new ships are built or old ones are taken out of service. Last year, Zim shares sank because supply outweighed demand.
Is ZIM stock going to recover? ›
Based on 4 Wall Street analysts offering 12 month price targets for ZIM Integrated Shipping Services in the last 3 months. The average price target is $14.18 with a high forecast of $22.00 and a low forecast of $9.20. The average price target represents a -21.70% change from the last price of $18.11.
What is the stock market prediction for ZIM Integrated Shipping Services? ›
Based on short-term price targets offered by four analysts, the average price target for ZIM Integrated Shipping Services comes to $13.50. The forecasts range from a low of $9.00 to a high of $22.00. The average price target represents a decline of 28.15% from the last closing price of $18.79.
Is ZIM integrated a good investment? ›
Good news, investors! ZIM Integrated Shipping Services is still a bargain right now. According to our valuation, the intrinsic value for the stock is $24.36, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low.
Why does ZIM keep falling? ›
The bank said ZIM was overexposed to spot prices and noted that the company's contract coverage of trans-Pacific routes was below average. According to Citi, just 35% of ZIM's trans-Pacific trade volumes are under contract. This, the analysts highlighted, is notably less than the industry average of around 65%.
Will ZIM ever go up? ›
Is ZIM stock going to rise? Based on the share price being below its 5, 20 & 50 day exponential moving averages, the current trend is considered strongly bearish and ZIM is experiencing selling pressure, which indicates risk of future bearish movement.
Who is the largest shareholder of ZIM? ›
The company's largest shareholder is Court Investments Limited, with ownership of 21%. In comparison, the second and third largest shareholders hold about 3.5% and 2.5% of the stock.
Is ZIM going to pay a dividend in 2024? ›
Last dividend for ZIM Integrated Shipping Service (ZIM) as of July 31, 2024 is 0.23 USD. The forward dividend yield for ZIM as of July 31, 2024 is 2.42%.
Why is ZIM declining? ›
Zim is one of the world's 20 largest ocean shipping companies. The stock was caught in the doldrums last year due to weak demand and investor concerns about its debt. But the company's outlook improved in early 2024 as tensions in the Middle East disrupted key shipping lanes and caused shipping rates to climb.
What is the true value of ZIM stock? ›
As of 2024-07-30, the Intrinsic Value of ZIM Integrated Shipping Services Ltd (ZIM) is (262.43) USD. This ZIM valuation is based on the model Discounted Cash Flows (Growth Exit 5Y). With the current market price of 18.79 USD, the upside of ZIM Integrated Shipping Services Ltd is -1496.6%.
ZIM price started in 2024 at $9.87. Today, ZIM traded at $16.93, so the price increased by 72% from the beginning of the year. The forecasted ZIM price at the end of 2024 is $21.62 - and the year to year change +119%. The rise from today to year-end: +28%.
Is the 49% dividend yield for Zim integrated shipping for real? ›
Its 49% dividend is a real standout. It makes one wonder why ZIM isn't a no-brainer buy for income investors. The problem is the underlying volatility of the stock and the shipping container industry and the fallacy of dividends.
Has ZIM stock ever split? ›
We currently have no ZIM Stock Split History on this stock.
What will ZIM stock price be in 2025? ›
Long-Term ZIM Integrated Shipping Services Ltd. Stock Price Predictions
| Year | Prediction | Change |
|---|
| 2025 | $ 32.18 | 69.48% |
| 2026 | $ 54.55 | 187.24% |
| 2027 | $ 92.45 | 386.81% |
| 2028 | $ 156.68 | 725.05% |
2 more rowsDividend Summary
There are typically 4 dividends per year (excluding specials).
Will ZIM shipping pay a dividend in 2024? ›
Last dividend for ZIM Integrated Shipping Service (ZIM) as of July 31, 2024 is 0.23 USD. The forward dividend yield for ZIM as of July 31, 2024 is 2.42%. Dividend history for stock ZIM (ZIM Integrated Shipping Service) including historic stock price, payout ratio history and split, spin-off and special dividends.
What is the next dividend for ZIM? ›
ZIM Integrated Shipping Services's next quarterly payment date is on Jun 11, 2024, when ZIM Integrated Shipping Services shareholders who owned ZIM shares before Jun 04, 2024 received a dividend payment of $0.23 per share. Add ZIM to your watchlist to be reminded of ZIM's next dividend payment.
