It's been a mediocre week for ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) shareholders, with the stock dropping 17% to US$9.29 in the week since its latest annual results. It was a pretty bad result overall; while revenues were in line with expectations at US$5.2b, statutory losses exploded to US$22.42 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from ZIM Integrated Shipping Services' four analysts is for revenues of US$5.73b in 2024. This would reflect a decent 11% increase on its revenue over the past 12 months. Losses are predicted to fall substantially, shrinking 85% to US$3.42. Before this latest report, the consensus had been expecting revenues of US$5.67b and US$2.84 per share in losses. So it's pretty clear the analysts have mixed opinions on ZIM Integrated Shipping Services even after this update; although they reconfirmed their revenue numbers, it came at the cost of a sizeable expansion in per-share losses.
As a result, there was no major change to the consensus price target of US$9.99, with the analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic ZIM Integrated Shipping Services analyst has a price target of US$18.00 per share, while the most pessimistic values it at US$5.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that ZIM Integrated Shipping Services' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 11% growth on an annualised basis. This is compared to a historical growth rate of 25% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 0.2% per year. Even after the forecast slowdown in growth, it seems obvious that ZIM Integrated Shipping Services is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at ZIM Integrated Shipping Services. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$9.99, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for ZIM Integrated Shipping Services going out to 2025, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for ZIM Integrated Shipping Services you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.