07-05-2021 Analysts boost outlook as Eagle Bulk ships haul loads of profits, By Eric Martin, TradeWinds
Two analysts hiked their outlook for Eagle Bulk Shipping as the New York-listed outfit’s fleet piles up earnings in a surging market during the second quarter. Fearnley Securities upgraded its rating on the shipowner’s shares from “hold” to “buy” on expectations that the company’s next earnings report will feature a mountain of profit.
And Clarksons Platou Securities, the investment banking division of shipbroker Clarksons, hiked its price target on Eagle Bulk’s shares to $60, a big jump from a $36 target set in March that the stock already surpassed last month.
Even though the Gary Vogel-led shipowner’s first quarter earnings came in slightly below expectations on Thursday, Fearnleys put its focus on the Connecticut company’s guidance for the second quarter. The bank’s analysts are now expecting the company to book adjusted earnings per share (EPS) of $3.66 in its next earnings report, more than three times the adjusted EPS that they said the company booked in the prior quarter. “Everything just seems to be moving in the right direction with continued upward pressure on asset values (and a strong equity currency), market drivers firing on all cylinders and an increasing flow of capital pouring into cyclical exposure,” Espen Landmark Fjermestad, Peder Nicolai Jarlsby and Ulrik Mannhart wrote.
As TradeWinds reported on Thursday, Eagle Bulk reported a profit of $9.8m for the first quarter. That amounted to $0.84 per share, below the $1.04 consensus expectation of equity analysts. But Clarksons noted that the shipowner’s fleet of supramaxes and ultramaxes is enjoying their best rates since 2010. “Coupled with several well-timed vessel acquisitions in recent months, shareholders are seeing additional value,” wrote analyst Omar Nokta. “While the shares are up 135% so far in 2021, we see plenty of upside potential.” The broker’s $60 price target represents a nearly 40% premium on Eagle’s closing stock price on Thursday, and it towers over the shares’ $10.85 price tag a year ago. Nokta said the company’s buying spree — which has seen the owner acquire seven vessels since December — has been well timed.
“Management sees further upside in vessel values given the strong market backdrop and we agree,” he wrote. “In fact we believe values remain too low relative to their current earnings power and expect they can revert to levels that were prevailing during the 2014 period.”