ZIM Stock Faces Downside Risk Amid Declining Freight Rates and Flat Volume Growth: Analyst

ZIM faces downside risk due to declining freight rates and flat volume growth, leading analyst Muneeba Kayani to reiterate a Sell rating with a $13.20 price target. The company anticipates a significant drop in freight rates for FY2025 and a flat volume growth outlook, despite raising EBITDA guidance. The net debt to EBITDA ratio is expected to increase, placing ZIM at a disadvantage compared to peers with a net cash position.

ZIM Integrated Shipping (NYSE: ZIM) has been navigating challenging market conditions, with the global container shipping industry adjusting to post-COVID trade patterns. The company recently reported a significant decline in its second-quarter earnings, with a 94% plunge in net profit to $24 million from $373 million in the year-earlier quarter [1]. Despite this, ZIM has reaffirmed its full-year 2025 guidance, increasing its adjusted EBITDA forecast to $1.8 billion-$2.2 billion and adjusted EBIT to $550 million-$950 million [1].

However, the company faces several downside risks. Analyst Muneeba Kayani reiterated a Sell rating with a $13.20 price target, citing declining freight rates and flat volume growth for FY2025. ZIM anticipates a significant drop in freight rates and a flat volume growth outlook, despite raising EBITDA guidance [2]. The net debt to EBITDA ratio is expected to increase, placing ZIM at a disadvantage compared to peers with a net cash position [2].

ZIM's stock price surged this week due to rumors of a potential buyout, with the deal valuing the company at $2.4 billion, or $20 per share. However, the market's enthusiasm may be masking a fragile business model. The company's upcoming earnings report, scheduled for August 20, 2025, is expected to show an EPS of $1.50 per share, a 51.3% year-over-year (YoY) decline, and revenues of $1.77 billion, an 8.5% YoY decrease [2].

Investors should closely monitor ZIM's upcoming earnings report and the viability of the proposed acquisition. The company's commitment to environmental, social, and governance (ESG) initiatives and digital transformation is a strategic strength, but these initiatives are currently a drag on profitability and may not offset broader industry headwinds [3].

References:
[1] https://investors.zim.com/news/news-details/2025/ZIM-Reports-Financial-Results-for-the-Second-Quarter-of-2025/default.aspx
[2] https://www.ainvest.com/news/zim-integrated-shipping-services-stock-spikes-reports-private-equity-acquisition-bid-2508/
[3] https://www.ainvest.com/news/zim-integrated-shipping-buyout-hype-fundamental-realities-q2-earnings-outlook-2508/