JPMorgan rates Maersk underweight citing need for higher fleet spending
Tanker freight rates surged to historically high levels on Aug. 27 as restricted shipping through the Strait of Hormuz limits vessel availability six months into the Middle East conflict, S&P Global Energy said in a market roundup published by The Wall Street Journal. The Middle East Gulf-Japan Long Range 2 tanker route hit an all-time high of $107.72 a metric ton, according to Platts data. Ship crossings through the waterway, which normally handles around 20% of global seaborne oil and LNG flows, have fallen by more than 80% since the U.S.-Iran war began on Feb. 28.
The shipping disruption is reshaping analyst views across the transport sector. J.P. Morgan said container-shipping company Maersk has seen a strong near-term earnings boost from more resilient freight rates, but the current earnings and freight rate levels are unsustainable. Strong near-term cash generation is unlikely to translate into material shareholder returns, the bank said, because capital expenditure in the shipping business will need to rise to halt capacity-share loss.
Maersk management noted that the company’s utilization of its fleet capacity is now at 96% and that the task will be to ensure the company has the capacity to grow. “This suggests fleet investment may need to increase,” J.P. Morgan added in its note. The bank rated Maersk stock at underweight with a target price of 10,000 Danish kroner. Shares rose 0.9% to 22,170 kroner.
In a separate note, Goldman Sachs said Toyota Motor has the characteristics required to establish a meaningful presence in robotics. According to the bank, those include urgency in addressing supply-chain pressures associated with the shift to electric vehicles, hardware and software capabilities, and management’s positioning of robotics as a growth strategy. Continuous advancements in physical artificial intelligence are accelerating the development of humanoid robots, the U.S. bank said.
The automotive industry is uniquely positioned to support the mass production of humanoid robots, Goldman Sachs said. Toyota could produce about 190,000 to 540,000 humanoid robot units in 2035, implying a global market share of about 3%–8%, the bank projected.