2024-04-26 13:25:08 ET
ZIM Integrated (NYSE: ZIM) stock price went through a short-squeeze on Friday as traders continued focusing on the ongoing crisis in the Middle East. It climbed by over 15% on Friday, reaching a high of $14, its highest level since February 1st. It has soared by over 45% from its lowest point this year.
Shipping costs are falling
ZIM Integrated stock price continued soaring even as the shipping costs continued moving downwards as te crisis in the Middle East eased. Data by Drewry shows that the average shipping cost dropped to $2,706 last week, down from $3,965 earlier this year.
Global container shipping costs
Shipping costs remains significantly higher than last December’s low of $1,380. There are signs that they will continue falling if the crisis in war of words between Iran and Israel eases.
ZIM Integrated, like other shipping companies, does well when shipping prices are rising. For example, its annual revenues surged from over $10.7 billion in 2021 to over $12 billion as shipping costs surged. Revenues then dropped to $5.16 billion in 2023.
The shipping industry is expected to go through substantial headwinds this year. While shipping costs are still elevated, companies will need to pay more for energy since the price of crude oil has jumped recently.
Also, these companies are contending with longer routes because of the issues at the Panama Canal and the Red Sea. Most importantly, the number of new ships coming online this year will have an impact on prices.
Analysts expect that ZIM’s revenue for the first quarter will be $1.58 billion, an increase from $1.38 billion in the same period in 2023. It made $1.2 billion in the fourth quarter. For the year, analysts expect its revenues will be $5.7 billion, up from $5.1 billion last year.
Some analysts believe that ZIM will return some money to its shareholders through dividends if it turns a profit in the first quarter. Such a move will be short-lived since analysts expect its annual loss to be about $1.3 per share. Analysts also expect that its revenue will drop by 78% in the next five years.
ZIM Integrated stock price forecast
The daily chart shows that the ZIM share price went parabolic on Friday as it reached a high of $14. It has moved above the ascending trendline that connects the lowest swings since November.
The 25-day and 50-day Exponential Moving Averages (EMA) have made a bullish crossover while the Relative Strength Index (RSI) and the MACD have all pointed upwards.
Therefore, the short-term outlook for the stock is moderately bullish, with the next point to watch being at $15.57, its highest swing in January. However, these gains could be limited as shipping costs moderate.
The post ZIM stock price spikes amid dividend hopes but there’s a key risk appeared first on Invezz
