ZIM stock gains after earnings beat; analysts unfazed by downbeat guidance

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ZIM Integrated Shipping Services (NYSE:ZIM) stock jumped as much as 11.4%, before paring gains to trade over 3% higher on Wednesday after the firm posted better-than-expected Q3 results.

The cargo shipping company also lowered its 2022 outlook to reflect steeper decline in spot freight rates, softer demand and adjusted contract rates - factors already expected in the weaker container market.

ZIM (ZIM) expects 2022 adj. EBITDA of $7.4B-$7.7B and adj. EBIT of $6B-$6.3B. Its prior outlook was adj. EBITDA of $7.8B-$8.2B and adj. EBIT of $6.3B-$6.7B.

"We now expect our carried volume to be slightly lower than 2021. On the cost side, we assume a slightly more favorable charter rate environment, though the impact will be marginal given the limited number of charter renewals," said CFO Xavier Destriau in a post-earnings call.

"The combination of weaker demand, falling freight risk and risk of oversupply creates a challenging business environment for container shipping," Destriau cautioned.

ZIM (ZIM) also declared a $2.95/share quarterly dividend, which J.P. Morgan said implies its dividend policy could remain unchanged.

"While this doesn't change the mid-term outlook, which we think is quite poor, we think these results may cause some relief today and expect a supportive share price," said analyst Samuel Bland.

Despite the shift in near-term outlook, Bland noted that ZIM (ZIM) believes port congestion, delivery slippage and IMO 2023 may help mid-term supply/demand.

Wall Street analysts on average rate the shipping firm Hold, in line with the Hold rating by SA Quant.