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Investing.com -- UBS cut its price target on A.P. Moller-Maersk and warned that a worsening supply glut could push the shipping industry back into losses during the upcoming trough season.
Analysts trimmed its 2026 EBITDA estimate for the Danish shipping giant by 13% to $5.3 billion, around 12% below consensus, citing falling freight rates and limited levers to reduce capacity.
UBS maintained a Neutral rating and slightly lowered its price target to 12,000 Danish crowns from 12,500.
“The current order book, 32.7% of the active fleet, compares to ~12% of the active fleet older than 20 years which we believe may incentivise market share gains rather than rational behaviour,” the brokerage wrote.
It expects the industry to swing back to negative EBIT and free cash flow burn in late 2025 and early 2026.
UBS said Maersk is particularly exposed because its Ocean unit’s profitability lags peers. In the second quarter, its EBIT margin was 3% compared with an industry average of around 11%.
A 3 percentage point underperformance on $30 billion of Ocean revenue could translate into about $1 billion of extra cash burn versus peers in a downturn, it estimated.
UBS expects mid-term overcapacity to increase further, with limited room to cut supply through vessel scrapping or slower sailing speeds.
Upside risks could come from stronger-than-expected demand, fresh supply chain bottlenecks, or greater benefits from Maersk’s Gemini cost-saving programme.
But UBS sees the risk-reward skewed to the downside in the near term if its loss-making industry scenario plays out.