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Investing.com -- Jefferies downgraded Matson (NYSE:MATX) to Hold from Buy on continued weakness in China-U.S. container volumes and pressure on freight rates, despite a stronger-than-expected second quarter.
The firm expects Matson’s Q2 earnings to come in ahead of prior estimates, maintaining its EPS forecast at $2.18, flat sequentially but down from $3.31 a year earlier.
The company’s volumes declined sharply in April but saw a short-lived boost in May following a temporary China-U.S. tariff reprieve.
However, activity softened again in June and into July, with spot rates dropping back toward early-year lows.
Jefferies said freight volatility has been unusually sharp, with rates on the Shanghai–U.S. West Coast route surging from $2,500 per forty-foot unit in April to $6,000 by early June before falling to near $2,000 in July.
Matson typically commands premium pricing due to its high-speed service, but broader market softness is weighing on expectations.
The broker cut its third-quarter EPS forecast to $2.38 from $3.49 and lowered its full-year estimate to $8.99, down from $10.64.
It noted that while Matson may outperform broader volume trends due to growth in Vietnam shipments, visibility into the rest of the year remains low given the weak peak season so far.
Jefferies reduced its price target to $115 from $135, citing a more cautious outlook and applying a 6x EV/EBITDA multiple in line with the company’s historical valuation.