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Investing.com -- UBS cut its price target for A.P. Moller-Maersk to DKr 12,000 from DKr 12,500 in a note on Tuesday, warning that overcapacity could weigh heavily on profitability.
The bank maintained a Neutral rating but said it sees the “risk reward skewed to the downside into the next months if our thesis for the industry moving to loss making in 4Q/1Q proves correct.”
UBS said it now forecasts Maersk’s 2026 EBITDA at $5.3 billion, “circa 12% lower vs. consensus $6.05 billion.”
The analysts noted that “we cut our Maersk EBITDA FY25/26 estimates by 4%/13% to reflect the evolution of the spot rates.”
The bank highlighted the deteriorating rate environment, saying “after declines over recent weeks the latest SCFI is aligned with the average 4Q23 levels,” a period when “industry EBIT margin was negative.”
UBS cautioned there is “a good chance for the industry to move back to negative EBIT and FCF burn in the trough season that starts in early October.”
Overcapacity remains the central issue. UBS pointed to an order book “32.7% of the active fleet” compared with just 12% of the fleet older than 20 years, warning this “may incentivise market share gains rather than rational behaviour.”
The analysts also saw “limitations in two of the main levers to address the supply (scrapping and slowing down sailing speeds) mid-term.”
Maersk’s position appears weaker than peers, with UBS noting that in the second quarter “Maersk Ocean generated an EBIT margin of 3% vs. the average of the peers of ~11%.”
That margin gap, it said, could translate to “~USD 1bn of incremental cash burn vs. the average of the peers” if rates fall back to breakeven.