Well positioned for the new normal

ZIM Integrated (NYSE: ZIM) stock price has had a difficult time even as the company has had the best years ever. The stock was trading at $22, which was about 75% from the highest point in 2022, giving it a market cap of over $2.8 billion.

ZIM business boomed during the pandemic

ZIM Integrated has been in a strong growth in the past few years. Its total revenue has jumped from over $2.5 billion in 2016 to over $12 billion in 2022. It has also become a more profitable company as it has moved from an annual loss of $163.5 million in 2016 to a profit of $4.6 billion in 2023. This growth was driven by the strong performance of shipping during the pandemic. 

ZIM Integrated’s balance sheet has also seen some changes in the past few years. Its cash and short-term investments have jumped from $185 million in 2016 to over $3.35 billion. Most importantly, data compiled by SeekingAlpha shows that it has deleveraged its books. Its short-term borrowings have fallen to just $53 million while its long-term debt has moved from $610 million in 2016 to ovcr $91.9 million.

ZIM stock price has dropped because of the changing situation in the shipping industry. Data shows that shipping costs have dropped sharply in the past few months. As shown below, the Freightos Baltic Index (FBI) price has dropped to $1,463, the lowest level since March 2020. At its peak, the index was at over $10,000.

Therefore, the ZIM Integrated share price has retreated as investors embrace the new normal. This new normal will likely see the company’s revenue growth and profitability drop in the coming months. There are also fears that the company’s dividend is at risk, which I don’t believe. 

ZIM Integrated seems like an undervalued company with a strong balance sheet. This means that the company will continue doing well in this new normal. The new normal will include lower dividend payouts to investors since the company distributes ~30% of its earnings to dividends.

ZIM Integrated stock price forecast

ZIM stock chart by TradingView

The daily chart shows that the ZIM Integrated share price has made a slow comeback in the past few weeks. It has risen by over 40% from the lowest point in December. However, the recovery has started fading in recently as it has formed a small double-top pattern whose neckline is at $19.61. 

Therefore, because of the double-top pattern, I suspect that the shares will remain under pressure for now. If this happens, the stock will likely retest the support at $19.6 and then bounce back in the coming months as bulls target the key point at $30.