On Wednesday, Berenberg raised the price target for Hapag-Lloyd AG (HLAG:GR) (OTC: HLAGF) shares to EUR171 from EUR170 while keeping a Hold rating on the stock.
This adjustment follows Hapag-Lloyd's announcement on July 9, 2024, regarding an increase in its 2024 earnings forecast. The shipping company's revised outlook is attributed to higher-than-anticipated freight rates spurred by persistent tensions in the Red Sea.
The firm adjusted its 2024 earnings per share (EPS) estimates for Hapag-Lloyd by approximately 86%, reflecting the immediate impact of the current freight rate environment. However, the analyst noted that the medium—and long-term estimates remain largely unaltered, suggesting that the current rates are viewed as temporary.
In addition to the EPS revision, the firm also modified its cost of capital estimate, considering a higher risk-free rate assumption. This change slightly offsets the positive effect of the EPS revision on the price target, leading to the nominal increase to EUR171.
The updated price target suggests a roughly 13% potential upside from the current levels. Berenberg's reiteration of the Hold rating indicates a cautious outlook, acknowledging the improved short-term profitability and considering the potential for changes in the rate environment moving forward.
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