Disconnect on Maersk Price at Four-Year High After Share Slump

  • Spread between share price, target largest among Danish stocks
  • Last 2 times spread spiked, share gained 35% over 1 year

The last time analyst forecasts for A.P. Moeller-Maersk A/S were as far off the traded share price as they are now was mid-2011.

As Denmark’s shipping and oil conglomerate gets dragged down by lower crude prices and slower Chinese growth, its shares have suffered the worst start to a year since at least 1992.

And now, the gap between the share price and the average 12-month analyst target has spiked. On Thursday, the spread implied a 48 percent upside to the stock, more than any other listed company in Denmark.

The question now is whether analysts have been slow to adjust their views after the recent share slump or whether Maersk is set to rally.

At least six banks have lowered their targets over the past two weeks. More cuts may be in store. Almost two-thirds of the 27 analysts tracked by Bloomberg haven’t updated their targets since the selloff in Chinese stocks started over Christmas.

If history is any guide, the disconnect could be a buy signal. The last time the spread spiked -- on Aug. 10, 2011 -- Maersk stock went on to gain 35 percent over the next year. Before that, the gap peaked on Oct. 27, 2008, which was followed by a similar share-price move.

Maersk shares fell 0.6 percent to 7,960 kroner at 12:33 p.m. in Copenhagen. The stock has declined in eight of this month’s nine trading days.

The price targets compiled by Bloomberg range from 8,000 kroner to 18,681 kroner and average 11,810 kroner. UBS AG’s Dominic Edridge is one of the analysts who cut his target this week. But he raised his recommendation to buy from neutral.

“Maersk’s share price discounts a very negative scenario for a long period,” Edridge said in the Jan. 11 note. “We believe any kind of improvement in trading conditions will positively impact on the share price, with limited downside from current levels.”

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