Last Update 10 Jan 26

Fair value Increased 24%

MATX: Higher Fair Value Assumptions Will Support Future Freight Cycle Upside

Analysts have lifted their fair value estimate for Matson to about $178.50 from $144.00, citing a higher price target backdrop and updated assumptions around revenue growth, profit margins, and forward P/E multiples.

Analyst Commentary

Recent research points to a mixed backdrop for transport, with several freight indicators still soft even as certain pricing trends show signs of firming. In this context, the higher fair value estimate for Matson reflects updated assumptions on how the company might execute through a muted cycle and what investors are willing to pay on a P/E basis.

Bullish Takeaways

Bullish analysts are lifting price targets, which signals increased confidence that Matson's earnings profile and cash generation can support a higher valuation than before.
The view that transport has been in a prolonged and muted cycle suggests some analysts see Matson as relatively well positioned if freight conditions stabilize or improve. This could support the current P/E framework they are using.
Truckload spot rates have outperformed normal seasonality for several weeks, and bullish analysts see this as a potential sign that pricing pressure across freight may be easing. This could help support revenue and margin assumptions used in their models.
Maintaining positive ratings while adjusting targets upward indicates that bullish analysts see execution so far as sufficient to justify using richer valuation multiples than previously applied.

Bearish Takeaways

Several key macro indicators remain soft, with the ISM manufacturing index below 50 for most of the past few years. This keeps a lid on volume expectations and adds uncertainty to revenue growth assumptions for Matson.
LTL tonnage has been negative year over year for most of the recent periods cited, and cautious analysts may view this as a sign that freight demand is still fragile. This limits conviction around more aggressive margin and growth forecasts.
The recent outperformance of truckload spot rates versus normal seasonality is still relatively short lived, so bearish analysts may question how durable this trend is before assigning higher forward P/E multiples.
With the broader transport cycle described as prolonged and muted, some analysts may see risk that expectations embedded in higher fair value estimates could be hard to meet if volumes and pricing do not improve meaningfully.

What's in the News

Matson issued earnings guidance for the fourth quarter of 2025, indicating it expects consolidated operating income to be approximately 30% lower than the $147.5 million reported for the fourth quarter of 2024, and guided to interest income of about $32 million for the full year 2025 (Key Developments).
From July 1, 2025 to September 30, 2025, Matson repurchased 615,000 shares for $65.76 million, bringing total buybacks under its June 24, 2021 program to 13,144,044 shares, or 35.09% of the company, for $1,180.16 million (Key Developments).
Matson announced an agreement with WhaleSpotter Corp. to purchase and deploy the WhaleSpotter whale detection system developed by Woods Hole Oceanographic Institution, becoming the first container shipping company to use this marine protection technology, following prior trials and a $1 million research grant in 2023 (Key Developments).

Valuation Changes

Fair Value: The fair value estimate has risen from $144.00 to $178.50, which is a sizable upward adjustment in the model.
Discount Rate: The discount rate has edged down slightly from 7.47% to about 7.43%, implying a modestly lower required return in the updated assumptions.
Revenue Growth: The revenue growth input has moved from 25.80% to about 105.41%, indicating a much higher growth assumption in the new framework.
Net Profit Margin: The net profit margin assumption has increased from 8.14% to about 9.84%, reflecting a somewhat stronger profitability outlook in the model.
Future P/E: The future P/E multiple is essentially unchanged, moving fractionally from 16.76x to about 16.75x. The higher fair value is therefore driven more by changes in growth and margin inputs than by multiple expansion.

Diversification of shipping routes, fleet modernization, and logistics expansion supports stable, long-term revenue growth and improved operational efficiency.
Exclusive access to protected U.S. routes secures pricing power and reliable earnings amid volatile industry conditions.
Matson faces persistent industry risks from concentrated trade lanes, costly fleet upgrades, competitive pressures, and structural global trade shifts undermining growth and profitability.

Catalysts

About Matson

Engages in the provision of ocean transportation and logistics services.What are the underlying business or industry changes driving this perspective?

The ongoing shift in manufacturing and sourcing from China to Southeast Asia and the Pacific-evidenced by Matson's rapid growth in Vietnam-originated volumes and new expedited Vietnam services-positions the company to capture increasing transpacific shipping demand as global supply chains diversify, supporting future revenue growth.
Population growth, economic development, and resilient construction activity-particularly in Hawaii and Alaska-are contributing to steady, long-term demand for essential goods and supply chain services in Matson's protected trade lanes, underlining a stable and expanding revenue base.
Investments in fleet modernization and LNG-ready vessels enhance Matson's operational efficiency and regulatory readiness, reducing long-term operating costs and likely securing higher net margins as emissions standards tighten industry-wide.
Expansion of integrated logistics services and value-added offerings (such as warehousing and last-mile delivery) offers Matson new avenues for customer engagement and diversified revenue streams, which can drive higher average revenue per customer and incremental top-line growth.
Exclusive access to U.S.-flag, Jones Act-protected shipping routes provides Matson with a strong competitive moat and reliable pricing power, supporting stable long-term earnings and cash flows even amidst ongoing industry volatility.

Matson Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Matson's revenue will decrease by 0.3% annually over the next 3 years.
Analysts assume that profit margins will shrink from 14.3% today to 8.4% in 3 years time.
Analysts expect earnings to reach $289.2 million (and earnings per share of $11.31) by about September 2028, down from $494.1 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 13.3x on those 2028 earnings, up from 6.7x today. This future PE is greater than the current PE for the US Shipping industry at 8.4x.
Analysts expect the number of shares outstanding to decline by 4.28% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.45%, as per the Simply Wall St company report.

Matson Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Persistent uncertainty and volatility in global trade, driven by tariffs, shifting supply chains, and ongoing geopolitical tensions (e.g., US-China relations), present sustained risks of lower container volumes and unpredictable freight demand, especially in the China trade lane, which may significantly reduce Matson's revenue and earnings over the long-term.
The company's reliance on a narrow set of trade lanes-particularly US domestic routes (Hawaii, Alaska, Guam) and transpacific expedited services-exposes it to concentration risk; any downturn in these regional economies, regulatory changes to the Jones Act, or adverse demographic trends could erode Matson's revenue stability and limit diversification.
Heightened capital expenditure requirements for ongoing fleet modernization and new vessel construction (with over $300 million in annual new vessel CapEx and future dry-docking payments) may constrain free cash flow and pressure net margins for years to come, particularly if cash returns (dividends and buybacks) are prioritized over strategic investments.
Intensifying competition from both traditional carriers and new expedited services (e.g., CMA, ZIM, Hede, etc.), coupled with potential industry overcapacity and volatile spot rates, threatens Matson's pricing power and profitability, especially if rivals manage to sustain lower cost structures or gain scale advantages through consolidations, potentially impacting revenue and net margins.
Long-term structural shifts such as technological disruption (autonomous vehicles, alternative delivery methods), continued reshoring or near-shoring of manufacturing away from Asia, and changing global trade patterns may reduce demand for transpacific shipping, undermining volume growth prospects and putting downward pressure on Matson's long-term earnings and revenue base.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $115.0 for Matson based on their expectations of its future earnings growth, profit margins and other risk factors.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.4 billion, earnings will come to $289.2 million, and it would be trading on a PE ratio of 13.3x, assuming you use a discount rate of 7.4%.
Given the current share price of $103.39, the analyst price target of $115.0 is 10.1% higher. Despite analysts expecting the underlying buisness to decline, they seem to believe it's more valuable than what the market thinks.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

MATX: Fair Value And Rising P/E Will Support Long-Term Stability