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On Tuesday, CLSA analysts upgraded Kawasaki Kisen Kaisha Ltd. stock (9107:JP) (OTC:KAIKY) from an Underperform to a Hold rating. The analysts also raised the price target for the stock to ¥2,000 from ¥1,600, reflecting an improved outlook in key shipping sectors.
The analysts noted that despite Kawasaki Kisen’s exposure to the volatile car carriers and containership subsectors, there is a newfound stability. They highlighted that the market has likely already accounted for a decline in container earnings this year. Meanwhile, car carriers performed better than expected in the first quarter.
Kawasaki Kisen is considered the least leveraged among shippers, and its valuations remain attractive on an adjusted EV/Ebitda basis. The analysts have adjusted their price-to-book ratio to 0.7 times from 0.6 times, still below the 10-year average of 0.8 times, indicating continued potential for returns.
The decision to upgrade the stock rating and increase the price target reflects a cautious optimism towards Kawasaki Kisen’s future performance amid ongoing market uncertainties. However, the analysts remain cautious about the company’s long-term core earnings.
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