Shares in AP Moeller – Maersk (CSE:) slid on Friday after Bank of America cut its rating on the stock to Underperform, arguing that the risk-reward profile is now skewed to the downside as structural overcapacity in ocean freight intensifies and earnings face renewed pressure.

The bank also lowered its price objective to 11,500 Danish crowns from 14,000, implying around 23% downside from the last close.

Maersk shares fell nearly 3% in Copenhagen trading by 09:58 GMT.

The stock has outperformed the STOXX 600 Industrials index by about 30% over the past year, despite a sharp decline in spot freight rates. BofA said this resilience reflected stronger-than-expected demand in 2025 and disruption-related support to ocean freight, but warned that these factors are fading as capacity returns to the market.

The analysts, led by Muneeba Kayani, flagged the reopening of Red Sea routes as a key catalyst for weaker earnings. Maersk has begun resuming limited sailings through the Red Sea, which BofA sees as increasing the likelihood of a full reopening in the second quarter of 2026.

“Our base case assumes the Red Sea route fully reopens in 2Q26, despite rising geopolitical tensions, adding market capacity and driving a fall in earnings,” the analysts wrote. This would add roughly 6% to effective global shipping capacity, exacerbating an already oversupplied market.

“We see risk skewed to downside on structural ocean overcapacity,” they said.

Against this backdrop, BofA cut its 2026 EBITDA estimate by 26%, placing it about 20% below consensus. The bank now expects Maersk to guide to 2026 EBITDA of 4 to 7 billion dollars, compared with a consensus estimate of around 6.3 billion dollars.

It also flagged the risk of a sharp reduction in shareholder returns, noting that the share buyback could be halved to $1 billion amid forecast cash burn of about $3.4 billion.

While analysts acknowledged that the logistics and terminals divisions continue to perform relatively well, they said their contribution remains too small to offset structural pressure in Maersk’s core ocean business.

The team expects leverage to rise from a net cash position to around 0.9 times net debt to EBITDA in 2026.
Source: Investing.com