Credit Suisse Warms Up to Tankers
ThinkstockCredit Suisse is warming up to tankers. The brokerage firm reiterated its Outperform ratings on Euronav NV (NYSE: EURN), Scorpio Tankers Inc. (NYSE: STNG), and Tsakos Energy Navigation Limited (NYSE: TNP). Essentially, Credit Suisse is increasing its 2015 earnings per…
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Credit Suisse is warming up to tankers. The brokerage firm reiterated its Outperform ratings on Euronav NV (NYSE: EURN), Scorpio Tankers Inc. (NYSE: STNG), and Tsakos Energy Navigation Limited (NYSE: TNP).
Essentially, Credit Suisse is increasing its 2015 earnings per share (EPS) estimates for Euronav to $1.75, up from $1.55, which is 16% above consensus. At the same time it is also increasing the 2015 EPS estimate on Scorpio to $1.05, an increase from $0.94, and boosting Tsakos to $1.35, from $1.13.
Credit Suisse detailed in its report:
With second quarter in the books and the third quarter fixing cycle already underway the summer downturn is looking to be much more muted than expected. Tanker rates continue to surprise to the upside with VLCC rates currently averaging over $70k/d. Not to be left out product tanker rates (MRs) continue to be in the mid-high $20k/d range. While we expect some summer softness, the table already looks set for a strong winter market (think Iran).
The brokerage firm’s energy team held a conference call with Dr. Feshraki of FGE (energy consultants), and here were a few takeaways:
- 500,000 barrels a day of new volumes could be placed with buyers by end of 2015
- Iran is already in discussions with customers
- Another 700,000 barrels a day could be delivered 6 months after sanctions are removed
- Iran does not want a price war (Credit Suisse thinks it can’t win)
- Approximately 37 million barrels in storage (products and condensate)
The strong spot market has started to filter into the period market with 1 and 3 year rates up roughly 20% to 25% year to date. The period market is up 5% to 10% since May. However, despite the strength in charter rates, asset prices have trended sideways in the current market.
Overall Credit Suisse expects tanker values to rise.
Shares of Euronav were down 0.5% at $15.23 on Wednesday afternoon. The stock has a consensus analyst price target of $17.40 and a 52-week trading range of $10.34 to $15.50.
Scorpio shares were up 1.5% at $10.30 on a 52-week trading range of $6.48 to $10.51. The stock has a consensus analyst price target of $11.70.
Shares of Tsakos were down 0.4% at $10.28. The stock has a consensus analyst price target of $12.51 and a 52-week trading range of $4.75 to $10.50.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
