Investing.com -- BofA Securities in a note dated Thursday have downgraded the shares of DHL (ETR:DHLn) Group and A.P. Moller-Maersk (CSE:MAERSKb) to a "neutral" from a "buy" rating, signaling cautious sentiment in the transportation and logistics sector as the companies face uncertain market conditions heading into 2025.
The downgrades reflect BofA analysts’ concerns about a challenging macroeconomic and operational environment.
DHL’s adjustment comes amid expectations of subdued demand and a weakening German economy. BofA has revised Germany’s GDP growth forecasts downward, citing labor market pressures and deteriorating corporate health.
Despite the company’s shares trading below their historical average price-to-earnings ratio, analysts noted limited prospects for revaluation in the near term.
For Maersk, the downgrade is primarily attributed to concerns of oversupply in the ocean freight market. BofA forecasts a supply growth of 6% in 2025, potentially outpacing demand growth, which could lead to lower container freight rates later in the year.
The oversupply issue could be exacerbated if geopolitical factors, such as the reopening of the Red Sea (NYSE:SE) shipping route, increase global shipping capacity.
While Maersk is expected to maintain robust cash returns, BofA anticipates challenges to its earnings performance as trade dynamics evolve.
The downgrades flag broader themes impacting the transport sector, including tariff uncertainties and shifting e-commerce trends.
BofA remains cautious about the outlook for freight and postal sectors, projecting slower volume growth and constrained pricing power.
However, analysts continue to favor stocks like DSV and InPost, which retain "buy" ratings, citing their resilience and growth potential in a competitive market.