Maersk Stock Price Plunges On Earnings Miss and Coronavirus Warnings

on Feb 20, 2020
Updated: Apr 3, 2020
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  • Maersk misses fourth-quarter earnings expectations
  • “The outlook for 2020 is impacted by the current outbreak of the coronavirus in China,” says the company
  • The shipping giant expects 2020 EBITDA at $5.5 billion, lower than $5.7 billion generated in 2019, and the $6 billion expected from the analysts
  • Stock loses almost 4% on the news

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Shares of the shipping giant Maersk plunged today on the earnings miss and warnings that the coronavirus outbreak will impact the company’s earnings this year. As a result, the Maersk stock price closed nearly 4% lower today.

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“Weekly container vessel calls at key Chinese ports were significantly down compared to last year during the last weeks of January and the first weeks of February,” Maersk said in a statement.

Maersk reported EBITDA of $1.46 billion for the fourth-quarter, which is lower than the $1.51 expected from the market’s analysts. For this year, the company expects EBITDA of $5.5 billion, again lower than the $6 billion expected. Last year, Maersk earned $5.7 billion.

“The outlook for 2020 is impacted by the current outbreak of the coronavirus in China, which has significantly lowered visibility on what to expect in 2020,” Maersk said.

Still, Maersk expects that the demand for shipping will grow 1% to 3% this year, after a rise of 1.4% last year, and 3.8% two years ago.

“The market had already priced in a negative impact from the coronavirus outbreak and it looks like they had priced in a bit too much in the case of Maersk. In addition, I believe that Maersk is also getting some kudos for the acquisition they announced yesterday,” said Sydbank analyst Mikkel Emil Jensen.

Yesterday, Maersk announced that it has reached an agreement to acquire Performance Team, a warehousing company from the United States. The aim of the purchase is to deliver more customized logistics solutions.

The Denmark-based Maersk is considered to be the world’s biggest container shipping firm with around 20% of the global market share.

Technical analysis: Stock moves lower

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Shares of Maersk have moved lower in reaction to the company’s warnings that the coronavirus is likely to weigh on earnings this year. This hasn’t surprised investors much, given that this was expected given the nature of the shipping business and China’s role in it.

Maersk stock daily chart (TradingView)

The bears managed to force a close today below both the 100 DMA and 200 DMA, which will further impact price developments in the short-term. Maersk stock price is now likely to continue lower as the bears have assumed control. The zone around 7450 looks like the next destination lower.

Summary

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Maersk stock price lost around 4% after the company reported lower-than-expected earnings for the fourth-quarter, and issued a warning that the coronavirus outbreak will impact profits this year.

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